2021 Instructions for Form 100W Corporation Tax Booklet Water’s-Edge FilersRevised: 01/2024

2021 Instructions for Form 100W
California Corporation Franchise or Income Tax Return — Water’s-Edge Filers

References in these instructions are to the Internal Revenue Code (IRC) as of January 1, 2015, and to the California Revenue and Taxation Code (R&TC).

Differences between California and Federal Law

In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. When California conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to ftb.ca.gov and search for conformity. Additional information can be found in FTB Pub. 1001, Supplemental Guidelines to California Adjustments, the instructions for California Schedule CA (540 or 540NR), and the Business Entity tax booklets.

The instructions provided with California tax forms are a summary of California tax law and are only intended to aid taxpayers in preparing their state income tax returns. We include information that is most useful to the greatest number of taxpayers in the limited space available. It is not possible to include all requirements of the California Revenue and Taxation Code (R&TC) in the instructions. Taxpayers should not consider the instructions as authoritative law.

Introduction

Corporations may elect to compute income attributable to California sources on the basis of a water’s-edge combined report. In general, under a water’s-edge election, affiliated foreign corporations are excluded from the combined report.

For purposes of these instructions, the word “taxpayer” means a corporation in the combined group that has a California filing requirement.

The statute allowing the corporation to file on a water’s-edge basis does not supersede the concept of unity; it merely limits the unitary entities included in the combined report. For a discussion of the concepts of the unitary method of taxation and its application by the State of California, get FTB Pub. 1061, Guidelines for Corporations Filing a Combined Report. Once the corporation computes its income attributable to California sources on the water’s-edge combined report basis, the corporation may either file a separate return or elect to file a single return with the other corporations in the water’s-edge group. For more information, get Schedule R-7, Election to File a Unitary Taxpayers’ Group Return, which is included in Schedule R, Apportionment and Allocation of Income.

S corporations normally may not be included in a combined report. For S corporations filing on a water’s-edge basis, this booklet should be used in conjunction with Form 100S, California S Corporation Franchise or Income Tax Return.

For more information, see General Information R, Apportionment of Income; S, Combined Report; and T, Water’s-Edge Reporting.

What’s New/Tax Law Changes

Water’s-Edge Election and “Doing Business” – For taxable years beginning on or after January 1, 2021, if a unitary corporation that is not incorporated in the United States and not subject to tax under Corporation Tax Law in the year that a valid water’s-edge election is made, but subsequently becomes subject to taxation under the Corporation Tax Law solely due to it becoming engaged in business per R&TC section 23101(b), it will be deemed to have elected with the other members of the unitary combined reporting group. For more information, see R&TC Section 25113.

Restaurant Revitalization Grants – The American Rescue Plan Act (ARPA) of 2021, enacted on March 11, 2021, allows an exclusion from gross income for restaurant revitalization grants awarded to eligible entities that are used for allowable expenses for the covered period. California law does not conform to this federal provision. For more information, see Specific Line Instructions.

Other Loan Forgiveness – For taxable years beginning on or after January 1, 2019, California law allows an exclusion from gross income for borrowers of forgiveness of indebtedness described in Section 1109(d)(2)(D) of the Coronavirus Aid, Relief and Economic Security (CARES) Act as stated by section 278, Division N of the federal Consolidated Appropriations Act (CAA), 2021. The CAA, 2021, allows deductions for eligible expenses paid for with covered loan amounts. California law conforms to this federal provision, with modifications. For California purposes, these deductions generally do not apply to an ineligible entity. “Ineligible entity” means a taxpayer that is either a publicly-traded company or does not meet the 25% reduction from gross receipts requirements under Section 311 of the CAA, 2021. For more information, see Specific Line Instructions or go to ftb.ca.gov and search for AB 80.

Shuttered Venue Operator Grants – The CAA, 2021 enacted on December 27, 2020, allows an exclusion from gross income for grants received by shuttered venue operators. California does not conform to this federal provision. For more information, see Specific Line Instructions.

New Donated Fresh Fruits or Vegetables Credit – The sunset date for the New Donated Fresh Fruits or Vegetables Credit is extended until taxable years beginning before January 1, 2027. For more information, get form FTB 3814, New Donated Fresh Fruits or Vegetables Credit.

Homeless Hiring Tax Credit – For taxable years beginning on or after January 1, 2022, and before January 1, 2027, a Homeless Hiring Tax Credit (HHTC) will be available to a qualified taxpayer that hires individuals who are, or recently were, homeless. The amount of the tax credit will be based on the number of hours the employee works in the taxable year. Employers must obtain a certification of the individual’s homeless status from an organization that works with the homeless and must receive a tentative credit reservation for that employee. Any credits not used in the taxable year may be carried forward up to three years. For more information, go to ftb.ca.gov and search for hhtc.

Natural Heritage Preservation Credit – The Natural Heritage Preservation Credit is available for qualified contributions made on or after January 1, 2021, and no later than June 30, 2026. This credit may not be claimed for any contributions made on or after July 1, 2020, and on or before December 31, 2020. For more information, get form FTB 3503, Natural Heritage Preservation Credit.

Reporting Requirements – For taxable years beginning on or after January 1, 2021, taxpayers who benefited from the exclusion from gross income for the Paycheck Protection Program (PPP) loans forgiveness, other loan forgiveness, or the Economic Injury Disaster Loan (EIDL) advance grant and related eligible expense deductions under the federal CARES Act, Paycheck Protection Program and Health Care Enhancement Act, Paycheck Protection Program Flexibility Act of 2020, the CAA, 2021,or the PPP Extension Act of 2021, should file form FTB 4197, Information on Tax Expenditure Items, as part of the Franchise Tax Board’s (FTB) annual reporting requirement. For more information, get form FTB 4197.

California Microbusiness COVID-19 Relief Grant – For taxable years beginning on or after September 1, 2020, and before January 1, 2023, California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Microbusiness COVID-19 Relief Program that is administered by the Office of Small Business Advocate (CalOSBA). For more information, see R&TC Section 24311 and Specific Line Instructions.

California Venues Grant – For taxable years beginning on or after September 1, 2020, and before January 1, 2030, California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Microbusiness COVID-19 Relief Program that is administered by CalOSBA. For more information, see R&TC Section 24312 and Specific Line Instructions.

Gross Income Exclusion for Bruce’s Beach – Effective September 30, 2021, California law allows an exclusion from gross income for the first time sale in the taxable year in which the land within Manhattan State Beach, known as “Peck’s Manhattan Beach Tract Block 5” and commonly referred to as “Bruce’s Beach” is sold, transferred, or encumbered. A recipient’s gross income does not include the following:

• Any sale, transfer, or encumbrance of Bruce’s Beach;
• Any gain, income, or proceeds received that is directly derived from the sale, transfer, or encumbrance of Bruce’s Beach.

Small Business COVID-19 Relief Grant Program – For taxable years beginning on or after January 1, 2020, and before January 1, 2030, California allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the COVID-19 Relief Grant under Executive Order No. E 20/21-182 and the California Small Business COVID-19 Relief Grant Program established by Section 12100.83 of the Government Code. For more information, see Specific Line Instructions.

Paycheck Protection Program (PPP) Loans Forgiveness – For taxable years beginning on or after January 1, 2019, California law allows an exclusion from gross income for covered loan amounts forgiven under the federal CARES Act, Paycheck Protection Program and Health Care Enhancement Act, Paycheck Protection Program Flexibility Act of 2020, the CAA, 2021, or the PPP Extension Act of 2021.

Also, the ARPA expands PPP eligibility to include “additional covered nonprofit entities” which includes certain Code 501(c) nonprofit organizations and Internet-only news publishers and Internet-only periodical publishers. California law does not conform to this expansion of PPP eligibility. For more information, see Specific Line Instructions.

The CAA, 2021, allows deductions for eligible expenses paid for with covered loan amounts. California law conforms to this federal provision, with modifications. For California purposes, these deductions do not apply to an ineligible entity. “Ineligible entity” means a taxpayer that is either a publicly-traded company or does not meet the 25% reduction from gross receipts requirements under Section 311 of Division N of the CAA, 2021. For more information, see Specific Line Instructions or R&TC Section 24308.6, or go to ftb.ca.gov and search for AB 80.

Revenue Procedure 2021-20 allows taxpayers to make an election to report the eligible expense deductions related to a PPP loan on a timely filed original 2021 tax return including extensions. If a taxpayer makes an election for federal purposes, California will follow the federal treatment for California tax purposes.

Advance Grant Amount – For taxable years beginning on or after January 1, 2019, California law conforms to the federal law regarding the treatment for an emergency EIDL grant under the federal CARES Act or a targeted EIDL advance under the CAA, 2021.

Conformity – For updates regarding the federal acts, go to ftb.ca.gov and search for conformity.

Important Information

• The FTB offers e-filing for the following entities:
  • Corporations filing Form 100W, California Corporation Franchise or Income Tax Return – Water’s-Edge Filers, and certain accompanying forms and schedules.
  • Corporations filing Form 100X, Amended Corporation Franchise or Income Tax Return.

  Check with the software providers to see if they support business e-filing.

• California law requires any business entity that files an original or amended tax return that is prepared using tax preparation software to electronically file (e-file) their tax return with the FTB. For more information, go to ftb.ca.gov and search for business efile.
• Corporations can make payments online using Web Pay for Businesses. Corporations can make an immediate payment or schedule payments up to a year in advance. Go to ftb.ca.gov/pay.
• Corporations can use a Discover, MasterCard, Visa, or American Express Card to pay business taxes. Go to officialpayments.com. ACI Payments, Inc. (formerly Official Payments) charges a convenience fee for using this service.
• Corporations can make an estimated tax or extension payment using tax preparation software. Check with the software provider to determine if they support Electronic Funds Withdrawal (EFW) for estimated tax or extension payments.
• The Internal Revenue Service (IRS) requires certain corporations to file Schedule UTP (Form 1120), Uncertain Tax Position Statement, with their income tax returns. For California purposes, if a corporation is required to file Schedule UTP (Form 1120) with their federal tax return, the corporation must attach a copy of federal Schedule UTP (Form 1120) to the California tax return.
• R&TC Section 41 Reporting Requirements – Beginning in taxable year 2020, a C corporation partner of a partnership conducting a commercial cannabis activity that is licensed under California Medicinal and Adult-Use Cannabis Regulation and Safety Act should file form FTB 4197, Information on Tax Expenditure Items. The FTB uses information from form FTB 4197 for reports required by the California Legislature. Get form FTB 4197 for more information.
• Net Operating Loss Suspension – For taxable years beginning on or after January 1, 2020, and before January 1, 2023, California has suspended the net operating loss (NOL) carryover deduction. Corporations may continue to compute and carryover an NOL during the suspension period. However, corporations with taxable income of less than $1,000,000 or with disaster loss carryovers are not affected by the NOL suspension rules.

  The carryover period for suspended losses is extended by:

  • Three years for losses incurred in taxable years beginning before January 1, 2020.
  • Two years for losses incurred in taxable years beginning on or after January 1, 2020, and before January 1, 2021.
  • One year for losses incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022.
• For more information, see R&TC Section 24416.23, and get form FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations – Corporations.
• Credit Limitation – For taxable years beginning on or after January 1, 2020, and before January 1, 2023, there is a $5,000,000 limitation on the application of credits for taxpayers. The total of all credits including the carryover of any credit for the taxable year may not reduce the “tax” by more than $5,000,000. For taxpayers included in a combined report, the limitation is applied at the group level. The credits disallowed due to the limitation may be carried over. The carryover period for disallowed credits is extended by the number of taxable years the credit was not allowed. This limitation does not apply to the Low Income Housing Credit.
• For taxable years beginning on or after July 1, 2019, California requires taxpayers to use their federal IRC Section 338 election treatment for certain stock purchases treated as asset acquisitions or deemed election where purchasing corporation acquires asset of target corporation. If an election has not been made by a taxpayer under IRC Section 338, the taxpayer shall not make a separate state election for California.
• Under IRC Section 965, if the corporation owns (directly or indirectly) certain foreign corporations, it may have to include certain deferred foreign income on its income tax return. California does not conform. If the corporation reported IRC Section 965 inclusions and deductions on Form 1120, U.S. Corporation Income Tax Return, for federal purposes, write “IRC 965” at the top of Form 100W.
• Under IRC Section 951A, if the corporation is a U.S. shareholder of a controlled foreign corporation, the corporation must include Global Intangible Low-Taxed Income (GILTI) in its income. California does not conform.
• The Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2017, made changes to the IRC. The California R&TC does not conform to all of the changes. In general, for taxable years beginning on or after January 1, 2019, California conforms to the following TCJA provisions:
  • Federal Deposit Insurance Corporation (FDIC) Premiums
  • Excess employee compensation
• The TCJA amended IRC Section 1031 limiting the nonrecognition of gain or loss on like-kind exchanges to real property held for productive use or investment. California conforms to this change under the TCJA for exchanges initiated after January 10, 2019.
• For taxable years beginning on or after January 1, 2019, California conforms to certain provisions of the TCJA relating to changes to accounting methods for small businesses.

  A small business may elect to apply the same provisions above to taxable years beginning on or after January 1, 2018, and before January 1, 2019. Taxpayers make the election by providing the following information to the FTB:

  1. Include a statement with their original or amended California tax return stating the taxpayers’ intent to make a Small Business Method of Accounting election(s).
  2. On the top of the first page of the original or amended tax return, print “AB 91 - Small Business Method of Accounting Election” in black or blue ink.
  3. Mail returns to:

     Mail

     Franchise Tax Board
     PO Box 942857
     Sacramento, CA 94257-0500

• The TCJA amended IRC Section 280F relating to depreciation limitations on luxury automobiles. California does not conform to the federal amendments under the TCJA. For more information, get form FTB 3885, Corporation Depreciation and Amortization.
• The TCJA amended IRC Section 1221, excluding a patent, invention, model or design (whether or not patented), and a secret formula or process held by the taxpayer who created the property (and certain other taxpayers) from the definition of a capital asset. California does not conform to this amendment under the TCJA. For California purposes, IRC Section 1221 as of January 1, 2015, applies.
• The TCJA established Opportunity Zones. IRC Sections 1400Z-1 and 1400Z-2 provide a temporary deferral of inclusion of gross income for capital gains reinvested in a qualified opportunity fund, and exclude capital gains from the sale or exchange of an investment in such funds. California does not conform to the deferral and exclusion of capital gains reinvested or invested in federal opportunity zone funds under IRC Sections 1400Z-1 and 1400Z-2, and has no similar provisions.

  If, for California purposes, gains from investment in qualified opportunity zone property had been included in income during previous taxable year, do not include the gain in the current year income.

• If the corporation was involved in a reportable transaction, including a listed transaction, the corporation may have a disclosure requirement. Attach federal Form 8886, Reportable Transaction Disclosure Statement, to the back of the California return along with any other supporting schedules. If this is the first time the reportable transaction is disclosed on the return, send a duplicate copy of federal Form 8886 to the address below.

  Mail

  Tax Shelter Filing
  ABS 389 MS F340
  Franchise Tax Board
  PO Box 1673
  Sacramento CA 95812-9900

  The FTB may impose penalties if the corporation fails to file federal Form 8886, Form 8918, Material Advisor Disclosure Statement, or any other required information. A material advisor is required to provide a reportable transaction number to all taxpayers and material advisors for whom the material advisor acts as a material advisor. For more information, go to ftb.ca.gov and search for disclosure obligation.

• The IRS allows corporations with at least $10 million but less than $50 million in total assets at tax year end to file Schedule M-1 (Form 1120/1120-F), Reconciliation of Income (Loss) per Books With Income per Return, in place of Schedule M-3 (Form 1120/1120‑F), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More, Parts II and III. However, Schedule M-3 (Form 1120/1120-F), Part I, is required for these corporations. For California purposes, the corporation must complete the California Schedule M-1. For more information, see the instructions for Schedule M-1 – Reconciliation of Income (Loss) per Books With Income (Loss) per Return, in this booklet.
• R&TC Section 25128.7 requires all business income of an apportioning trade or business, other than an apportioning trade or business under R&TC Section 25128(b), to apportion its business income to California using the single-sales factor formula. For more information, get Schedule R, or go to ftb.ca.gov and search for single sales factor.
• R&TC Section 25136 requires all taxpayers to assign sales, other than sales of tangible personal property, using market assignment. For more information, get Schedule R or go to ftb.ca.gov and search for market assignment.
• R&TC Section 25120 was amended to add the definition of gross receipts. For a complete definition of “gross receipts,” refer to R&TC Section 25120(f), or go to ftb.ca.gov and search for 25120.
• R&TC Section 25135(b) adopts the Finnigan rule in assigning sales from tangible personal property.

  For more information regarding “gross receipts” or “Finnigan rule,” get Schedule R or go to ftb.ca.gov and search for corporation law changes.

• Beginning on or after January 1, 2012, a type of corporation called a “benefit corporation” can be formed with the purpose of creating general public benefit, provided certain requirements are met. An existing corporation can become a “benefit corporation,” if certain procedures are followed. In addition, a “benefit corporation” can be created through a merger or reorganization, if certain requirements are met. For more information, see the Corporations Code, commencing with Section 14600.
• Beginning on or after January 1, 2012, a type of corporation called a “flexible purpose corporation” could be formed, provided certain requirements were met. An existing corporation could merge or convert into a “flexible purpose corporation,” upon completion of certain requirements. A “flexible purpose corporation” must have a special purpose which may include but is not limited to, charitable and public purpose activities that could be carried out by a nonprofit public benefit corporation. For more information, see the Corporations Code, commencing with Section 2500.
• Effective January 1, 2015, all references to “flexible purpose corporations” in the Corporations Code are changed to “social purpose corporations,” although the requirements are substantially the same as prior law. Any flexible purpose corporation formed before January 1, 2015, may elect to amend its articles of incorporation to change its status to a “social purpose corporation.” If a flexible purpose corporation formed prior to January 1, 2015, does not amend its articles of incorporation to change its status, any reference to “social purpose corporation” in the Corporations Code is deemed a reference to a “flexible purpose corporation.” For more information, see the Corporations Code, commencing with Section 2500.
• California R&TC Section 24343.2 disallows the deduction for payments made to a club that restricts membership or the use of its services or facilities on the basis of ancestry or any characteristic listed or defined in Section 11135 of the Government Code, except for genetic information.
• For taxable years beginning on or after January 1, 2007, interest and dividends from intangible assets held in connection with a treasury function of the taxpayer’s unitary business, as well as the gross receipts and any overall net gain from the maturity, redemption, sale, exchange, or other disposition of these assets, are excluded from the sales factor. This exclusion encompasses the use of futures contracts and options contracts to hedge foreign currency fluctuations. See Cal. Code Regs., tit. 18 section 25137(c)(1)(D) for more information. For taxable years beginning on or after January 1, 2011, see R&TC Section 25120(f).
• For taxable years beginning on or after January 1, 2019, the following forms and instructions have been consolidated into one form FTB 3544, Assignment of Credit:
  • FTB 3544, Election to Assign Credit Within Combined Reporting Group.
  • FTB 3544A, List of Assigned Credit Received and/or Claimed by Assignee.

  Credit earned by members of a combined reporting group may be assigned to an affiliated corporation that is an eligible member of the same combined reporting group. A credit assigned may only be claimed by the affiliated corporation against its tax liability. For more information, get form FTB 3544 or go to ftb.ca.gov and search for credit assignment.

• Group nonresident returns may include:
  • Less than two nonresident individuals.
  • Nonresident individuals with more than $1 million of California taxable income.

  An additional 1% tax will be assessed on nonresident individuals who have California taxable income over $1 million.

  Get FTB Pub. 1067, Guidelines for Filing a Group Form 540NR, for more information.

• A C corporation is taxed on its earnings at regular corporate tax rates and the shareholders are then taxed on these earnings when they are distributed as dividends. For more information, get Form 100, Corporation Tax Booklet.
• An S corporation must elect to be treated as an S corporation. The S corporation pays a reduced tax rate of 1.5% on its net income. The profits and losses from the S corporation pass through to each shareholder through the Schedule K-1 (100S), Shareholder’s Share of Income, Deductions, Credits, etc., and each shareholder is responsible for paying taxes on the distributive share. California taxpayers that would like to elect to be treated as an S corporation should get the Form 100S, S Corporation Tax Booklet, for more information.
• A controlled foreign corporation (CFC) must include in a water’s edge combined report a portion of its income based on the ratio its Subpart F income bears to the current year earnings and profits, and its U.S. source income, regardless of whether the CFC is a California taxpayer. See form FTB 2416, Schedule of Included Controlled Foreign Corporations (CFC), included in this booklet, for more information.
• Use form FTB 3725, Assets Transferred from Corporation to Insurance Company, to report assets transferred from a corporation to an insurance company. Get form FTB 3725 for more information.
• Use form FTB 3726, Deferred Intercompany Stock Account (DISA) and Capital Gains Information, to meet the annual disclosure requirements of the combined reporting group of each DISA balance. Make sure to answer Question R on Form 100W, Side 3. Get form FTB 3726 for more information.
• In general, R&TC Sections 17024.5 and 23051.5 state that federal elections made before a taxpayer becomes a California taxpayer are binding for California tax purposes.
• For the purposes of determining the correct amount of tax for water’s-edge electors, a presumption of correctness attaches to all federal determinations, including determinations made at the audit, appeals, and/or competent authority levels.

California law conforms to federal law for the following:

• Reducing the compensation deduction for certain employers from $1 million to $500,000; and making certain parachute payments nondeductible.
• IRC Section 1245(b)(8) relating to amortizable IRC Section 197 intangibles property disposed on or after January 1, 2010.
• Corporations may elect to expense under IRC Section 179 part or all of the cost of certain properties placed in service during the taxable year and used in the trade or business. For more information, see form FTB 3885 included in this booklet.
• Large banks’ bad-debt losses deduction, which is limited to the actual losses rather than contributions to a reserve for bad debts.
• Disallowing the deduction for club membership fees and lobbying expenses.
• Disallowing the deduction for employee remuneration in excess of $1 million.
• For purposes of inventory accounting, an adjustment for shrinkage, based on an estimate, may be made. Taxpayers can voluntarily change their method of accounting if the method currently being used does not utilize estimates of inventory shrinkage and the taxpayer now would like to use that method.
• Required recognition of gain on certain appreciated financial positions in personal property.
• Securities traders and commodities traders and dealers are allowed to elect to use mark-to-market accounting similar to what is currently required for securities dealers. Commodities would include only commodities of a kind that are dealt with in the organized commodities exchange. An election to use the mark-to-market method for federal purposes is considered an election for state purposes and a separate election is not allowed.
• Limitation on exception for investment companies under IRC Section 351.
• Expansion of deduction for certain interest and premiums paid for company-owned life insurance.
• Repeal of special installment sales rule for manufacturers of tangible personal property.
• Payment of estimated tax for closely held real estate investment trusts (REITs) and income and services provided by REIT subsidiaries.

California law does not conform to federal law for the following:

• In general, the American Rescue Plan Act of 2021.
• The CAA, 2021, temporary expansion for qualified charitable contributions under the CARES Act through 2021 and full deduction for business meals provided by a restaurant paid or incurred during 2021-2022.
• The federal TCJA, signed into law on December 22, 2017, made changes to the IRC. In general, California R&TC does not conform to the changes. California taxpayers continue to follow the IRC as of the specified date of January 1, 2015, with modifications. The following is a non-exhaustive list of the TCJA changes:
  • The change in method of accounting treatment of S corporation conversions to C corporations.
  • The application of Subchapter C rules to S corporations.
  • The expanded definition of IRC Section 179 property for certain depreciable tangible personal property related to furnishing lodging and for qualified real property for improvements to nonresidential real property.
  • The change to IRC Section 163(j) which limits the business interest deduction.
  • The repeal of the corporate alternative minimum tax (AMT).
  • The modifications to the NOL provisions.
  • The modifications to the AMT credit.
  • The deferral and exclusion of capital gains reinvested or invested in qualified opportunity zone funds.
  • The exclusion of a patent, invention, model or design, and secret formula or process from the definition of capital asset.
  • The federal modifications to depreciation limitations on luxury automobiles (IRC Section 280F).
  • IRC Section 951A, relating to global intangible low-taxed income (GILTI).
  • IRC Section 965, relating to treatment of deferred foreign income.
• IRC Section 382(n) relating to special rule for certain ownership changes.
• The changes to the corporation in control and the issue price for the limitation on deduction of bond premium on repurchase.
• The enhanced IRC Section 179 expensing election.
• The first-year depreciation deduction allowed for new luxury autos or certain passenger automobiles acquired and placed in service in 2010 through 2021.
• IRC Section 613A(d)(4) relating to the exclusion of certain refiners.
• The IRS Notice 2008-83 relating to the treatment of deductions under IRC Section 382(h) following an ownership change.
• IRC Section 168(k) relating to the bonus depreciation deduction for certain assets.
• The decreased estimated tax payments for certain small businesses.
• The treatment of the loss from the sale or exchange of certain preferred stock (of Fannie Mae or Freddie Mac).
• The percentage depletion deduction, which may not exceed 65% of the taxpayer’s taxable income, is restricted to 100% of the net income derived from the oil or gas well property.
• Exclusion from gross income of certain federal subsidies for prescription drug plans under IRC Section 139A.
• Certain environmental remediation expenditures that would otherwise be chargeable to capital accounts may be expensed and taken as a deduction in the year the expense was paid or incurred.
• Deduction for corporate donation of scientific property and computer technology.
• Decreased capital gains tax rate.
• The treatment of Subpart F income.
• The IRC passive activity loss rules for real estate activities.

The above lists are not intended to be all-inclusive of the federal and state conformities and differences. For additional information, refer to the R&TC.

Records Maintenance Requirements

Any taxpayer filing on a worldwide or a water’s-edge basis is required to keep and maintain records and make the following available upon request:

• Any records needed to determine the correct treatment of items reported on the water’s-edge combined report for purposes of determining the income attributable to California.
• Any records needed to determine the treatment of items as nonbusiness or business income.
• Any records needed to determine the apportionment factors.
• Documents and information needed to determine the proper attribution of income to the U.S. or foreign jurisdictions under Section 482, Sections under Subchapter N of Chapter 1, or other similar provisions of the IRC.

See R&TC Section 19141.6 and the related regulations for more information. A corporation may be required to authorize an agent, through a Power of Attorney (POA), to act on its behalf in response to requests for information or records pursuant to R&TC Section 19504. For more information, go to ftb.ca.gov/poa.

The penalty for not maintaining the required records is $10,000 for each taxable year for which the failure applies. In addition, if the failure continues for more than 90 days after the FTB notifies the corporation of the failure, a penalty of $10,000 may be assessed for each additional 30-day period of continued failure. See General Information M, Penalties, for more information.

Classification of Certain Business Trusts and Certain Foreign Single Member Limited Liability Companies (SMLLCs)

In general, the classification of a business entity should be the same for California purposes as it is for federal purposes. However, an exception may apply for certain eligible business entities. A business trust or a previously existing foreign SMLLC may make an irrevocable election to be classified the same as federal for California purposes. To make the election, the business trust or the SMLLC must have been classified as a corporation under California law, but classified as a partnership (for a business trust) or elected to be treated as a disregarded entity (for SMLLC) for federal tax purposes for taxable years beginning before January 1, 1997. If this election is not made, the existing eligible business entity will continue to be classified and taxed as a corporation for California purposes. Get form FTB 3574, Special Election for Business Trusts and Certain Foreign Single Member LLCs, for more information.

General Information

C corporations filing on a water’s-edge basis are required to use Form 100W to file their California tax returns. In general, water’s-edge rules provide for an election out of worldwide combined reporting. Under water’s-edge, the scope of combined reporting is limited to certain corporations, whose income is subject to tax (directly or indirectly) by the United States government. S corporations filing on water’s-edge basis should use Form 100S to file their California tax returns.

When Completing the Form 100W:

• Use black or blue ink on the tax return sent to the FTB.
• Print name and address (in CAPITAL LETTERS).
• When a domestic corporation files the first California tax return, the fiscal year beginning date must be the date the corporation is incorporated.
• Round cents to the nearest whole dollar. For example, round $50.50 up to $51 or round $25.49 down to $25.
• Send a clean legible copy.
• Enter all types of payments (overpayment from prior year, estimated tax, nonresident tax, etc.) made for the 2021 taxable year on the applicable line.
• When making a payment with a check or money order, enclose, but do not staple, payment to the face of the tax return.
• Assemble the corporation return in the following order: Form 100W, Schedule R (if required) or Form 100-WE, supporting schedules, a copy of federal return (if required) and form FTB 5806, Underpayment of Estimated Tax by Corporations, (if required). Do not use staples or other permanent bindings to assemble the tax return.

A. Franchise or Income Tax

Corporation Franchise Tax

Entities subject to the corporation minimum franchise tax include all corporations (e.g., limited liability companies (LLCs) electing to be taxed as corporations) that meet any of the following:

• Incorporated or organized in California.
• Qualified or registered to do business in California.
• Doing business in California, whether or not incorporated, organized, qualified, or registered under California law.

The minimum franchise tax must be paid by corporations incorporated in California or qualified or registered under California law whether the corporation is active, inactive, not doing business, or operates at a loss. See General Information C, Minimum Franchise Tax, for more information.

The measured franchise tax is imposed on corporations doing business in California and is measured by the net income of the current taxable year for the privilege of doing business in that taxable year.

A taxpayer is “doing business” if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California or if any of the following conditions is satisfied:

• The taxpayer is organized or commercially domiciled in California.
• The sales, as defined in R&TC Section 25120(e) or (f), of the taxpayer in California, including sales by the taxpayer’s agents and independent contractors, exceed the lesser of $637,252 or 25% of the taxpayer’s total sales.
• The real property and tangible personal property of the taxpayer in California exceed the lesser of $63,726 or 25% of the taxpayer’s total real property and tangible personal property.
• The amount paid in California by the taxpayer for compensation, as defined in R&TC Section 25120(c), exceeds the lesser of $63,726 or 25% of the total compensation paid by the taxpayer.

In determining the amount of the taxpayer’s sales, property, and payroll for doing business purposes, include the taxpayer’s pro rata share of amounts from partnerships and S corporations.

For more information, see R&TC Section 23101 or go to ftb.ca.gov and search for doing business.

A corporation qualified with the California Secretary of State (SOS) might not be considered to be “doing business” in California. However, careful attention should be given to the term “doing business.” It is not necessary that the corporation conduct business or engages in transactions within the state on a regular basis. Even an isolated transaction during the taxable year may be enough to cause the corporation to be “doing business.”

Also, when a corporation is either a general partner of a partnership or a member of an LLC that is “doing business” in California, the corporation is considered to be “doing business” in California.

Corporation Income Tax

The corporation income tax is imposed on all corporations that derive income from sources within California but are not doing business in California.

For purposes of the corporation income tax, the term “corporation” is not limited to incorporated entities but also includes the following:

• Associations.
• Massachusetts or business trusts.
• REITs.
• LLCs electing to be taxed as corporations other than those subject to the corporate franchise tax.
• Other business entities, including partnerships, electing to be taxed as corporations.

B. Tax Rates

The following tax rates apply to corporations subject to either the corporation franchise tax or the corporation income tax.

• Corporations other than banks and financial corporations: 8.84%
• Banks and financial corporations: 10.84%

C. Minimum Franchise Tax

All corporations subject to the franchise tax, including banks, financial corporations, regulated investment companies (RICs), REITs, corporate general partners of partnerships, and corporate members of LLCs doing business in California, must file Form 100, California Corporation Franchise or Income Tax Return, or Form 100W and pay at least the minimum franchise tax as required by law. The minimum franchise tax, as indicated below, must be paid whether the corporation is active, inactive, operates at a loss, or files a return for a short period of less than 12 months.

• Domestic qualified inactive gold or quicksilver mining corporations: $25
• All other corporations subject to franchise tax (see General Information A, Franchise or Income Tax, for definitions): $800

A combined group filing a single return must pay at least the minimum franchise tax for each corporation in the group that is subject to franchise tax.

A corporation that incorporated or qualified through the California SOS to do business in California, is not subject to the minimum franchise tax for its first taxable year and will compute its tax liability by multiplying its state net income by the appropriate tax rate. The corporation will become subject to minimum franchise tax beginning in its second taxable year. This does not apply to corporations that are not qualified by the California SOS, or reorganize solely to avoid payment of their minimum franchise tax.

There is no minimum franchise tax for the following entities:

• Corporations that are not incorporated in California, not qualified under the laws of California, and are not doing business in California even though they derive income from California sources. However, if corporations meet the sale, property, or payroll threshold for “doing business” under R&TC Section 23101(b), corporations may be subject to the minimum franchise tax. For more information regarding “doing business,” see General Information A, Franchise or Income Tax; refer to R&TC Section 23101(b); get FTB Pub. 1050, Application and Interpretation of Public Law 86-272; or FTB Pub. 1060, Guide for Corporations Starting Business in California.
• Corporations that are not incorporated under the laws of California; whose sole activities in this state are engaging in convention and trade show activities for seven or fewer days during the taxable year; and that do not derive more than $10,000 of gross income reportable to California during the taxable year. These corporations are not “doing business” in California. For more information, get FTB Pub. 1060.
• Newly formed or qualified corporations filing an initial return.
• Credit unions.

Taxable Year of 15 Days or Less

A corporation is not subject to the $800 minimum franchise tax if the corporation did no business in this state during the taxable year and the taxable year was 15 days or less. See R&TC Section 23114(a) for more information.

D. Accounting Period/Method

The taxable year of a corporation must not be different from the taxable year used for federal purposes, unless initiated or approved by the FTB (R&TC Section 24632).

A change in accounting method requires consent from the FTB. However, a corporation that obtains federal approval to change its accounting method, or that is permitted or required by federal law to change its accounting method without prior approval and does so, is deemed to have the FTB’s approval if: (1) the corporation files a timely Form 100W consistent with the change for the first taxable year the change becomes effective for federal purposes, and (2) the change is consistent with California law. A copy of federal Form 3115, Application for Change in Accounting Method, and a copy of the federal consent to the change must be attached to Form 100W for the first taxable year the change becomes effective. Get FTB Notice 2020-04 for more information. The FTB may modify a requested change if the change would distort income for California purposes.

California follows the provisions of Revenue Procedure 2016-29 which updates the procedures for a change of accounting method involving previously unclaimed, but allowable depreciation or amortization deductions.

E. When to File

File Form 100W on or before the 15th day of the 4th month after the close of the taxable year unless the return is for a short-period as required under R&TC Section 24634. Generally, the due date of a short-period return is the same as the due date of the federal short-period return. See R&TC Section 18601(c) for the due date of a short-period return. Get FTB Notice 2016-04 for more information.

When the due date falls on a weekend or holiday, the deadline to file and pay without penalty is extended to the next business day.

Due to the federal Emancipation Day holiday observed on April 15, 2022, tax returns filed and payments mailed or submitted on April 18, 2022, will be considered timely.

See General Information O, Dissolution/Withdrawal, and P, Ceasing Business, for information on final returns.

If a corporation converts during its taxable year to a LLC or limited partnership (LP) under state law, then generally two short-period California returns must be filed (one short-period return for the corporation and another short-period return for the LLC or LP).

The corporate status and taxable year of the LLC or LP will not terminate and only a single return Form 100W is required if:

• the LLC or LP files a federal election to be classified as an association taxable as a corporation effective as of the conversion date,
• the conversion otherwise qualifies as a reorganization under IRC Section 368(a)(1)(F), and
• the LLC or LP satisfies the statutory requirements to be a corporation.

F. Extension of Time to File

If the corporation cannot file its California return by the 15th day of the 4th month after the close of the taxable year, it may file on or before the 15th day of the 11th month without filing a written request for an extension. Get FTB Notice 2019-07 for more information. There is no automatic extension period for business entities suspended on or after the original due date.

An automatic extension does not extend the time for payment of tax; the full amount of tax must be paid by the original due date of Form 100W. If there is an unpaid tax liability, complete form FTB 3539, Payment for Automatic Extension for Corporations and Exempt Organizations, included in this booklet, and send it with the payment by the original due date of the Form 100W.

When the due date falls on a weekend or holiday, the deadline to file and pay without penalty is extended to the next business day.

Due to the federal Emancipation Day holiday observed on April 15, 2022, tax returns filed and payments mailed or submitted on April 18, 2022, will be considered timely.

If the corporation must pay its tax liability electronically, all payments must be remitted by electronic fund transfer (EFT), EFW, Web Pay, or credit card to avoid the penalty. Do not send form FTB 3539.

G. Electronic Payments

Electronic Funds Transfer

Corporations remitting an estimated tax payment or extension payment in excess of $20,000 or having a total tax liability in excess of $80,000 must remit all of their payments through EFT. Once a corporation meets the threshold, all subsequent payments regardless of amount, tax type, or taxable year must be remitted electronically to avoid the 10% non-compliance penalty. The first payment that would trigger the mandatory EFT requirement does not have to be made electronically. Corporations required to remit payments electronically may use EFW, Web Pay, or credit card and be considered in compliance with that requirement. The FTB notifies corporations that are subject to this requirement. Those that do not meet these requirements may participate on a voluntary basis. If the corporation pays electronically, complete the form FTB 3539 worksheet for its records. Do not mail the payment voucher. For more information, go to ftb.ca.gov and search for eft, or call 916-845-4025.

Electronic Funds Withdrawal

Corporations can make an estimated tax or extension payment using tax preparation software. Check with the software provider to determine if they support EFW for estimated tax or extension payments.

Web Pay

Corporations can make payments online using Web Pay for Businesses. Corporations can make an immediate payment or schedule payments up to a year in advance. Go to ftb.ca.gov/pay.

Credit Card

Corporations can use Discover, MasterCard, Visa or American Express Card to pay business taxes. Go to officialpayments.com. ACI Payments, Inc. (formerly Official Payments) charges a convenience fee for using this service. Do not file form FTB 3539.

H. Where to File

Payments

If a tax is due and the corporation is not required to make the payment electronically (by EFT, EFW, Web Pay, or credit card),

• Mail Form 100W with payment to:

  Mail

  Franchise Tax Board
  PO Box 942857
  Sacramento CA 94257-0501

• e-filed returns: Mail form FTB 3586, Payment Voucher for Corporations and Exempt Organizations e-filed Returns, with payment to:

  Mail

  Franchise Tax Board
  PO Box 942857
  Sacramento CA 94257-0531

Using black or blue ink, make the check or money order payable to the “Franchise Tax Board.” Write the California corporation number and “2021 Form 100W” on the check or money order.

Make all checks or money orders payable in U.S. dollars and drawn against a U.S. financial institution.

Do not attach a copy of the return with the balance due payment if the corporation already filed/e-filed a return for the same taxable year.

Refunds

• Mail Form 100W requesting a refund to:

  Mail

  Franchise Tax Board
  PO Box 942857
  Sacramento CA 94257-0500

Return Without Payment or Paid Electronically

• Mail Form 100W without a payment or paid by EFT, EFW, Web Pay, or credit card to:

  Mail

  Franchise Tax Board
  PO Box 942857
  Sacramento CA 94257-0500

Private Delivery Services

California law conforms to federal law regarding the use of certain designated private delivery services to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. See the instructions for federal Form 1120, U.S. Corporation Income Tax Return, for a list of designated delivery services. If a private delivery service is used, address the return to:

Mail

Franchise Tax Board
Sacramento CA 95827

Private delivery services cannot deliver items to PO boxes. If using one of these services to mail any item to the FTB, do not use an FTB PO box.

I. Net Income Computation

The computation of net income from trade or business activities generally follows the determination of taxable income as provided in the IRC. However, there are differences that must be taken into account when completing Form 100W. There are two ways to complete Form 100W, the federal reconciliation method or the California computation method:

1. Federal Reconciliation Method
   1. Transfer the information from the federal Form 1120, Page 1, to Form 100W, Side 4, Schedule F, and attach a copy of the federal return with all supporting schedules.
   2. Enter the amount of federal ordinary income (loss) from trade or business activities before any NOL and special deductions on Form 100W, Side 1, line 1.
   3. Enter state adjustments on line 2 through line 16 to arrive at net income (loss) after state adjustments, on Form 100W, Side 2, line 17.
2. Schedule F – California Computation Method

   If the corporation has no federal filing requirement or if the corporation maintains separate records for state purposes, complete Form 100W, Side 4, Schedule F, to determine state ordinary income. If ordinary income is computed under California laws, generally no state adjustments are necessary. Transfer the amount from Schedule F, line 29, to Side 1, line 1. Complete Form 100W, Side 1 and Side 2, line 2 through line 16, only if applicable.

   For more information, see Specific Line Instructions.

Regardless of the net income computation method used, the corporation must attach any form, schedule, or supporting document referred to on the return, schedules, or forms filed with the FTB.

J. Alternative Minimum Tax (AMT)

Corporations that claim certain types of deductions, exclusions, and credits may be subject to California AMT. To compute California AMT, corporations must complete California Schedule P (100W), Alternative Minimum Tax and Credit Limitations – Water’s‑Edge Filers. See Schedule P (100W), included in this booklet, for more information.

K. Estimated Tax

Use Form 100-ES, Corporation Estimated Tax, to figure and pay estimated tax for a corporation.

Corporations are required to pay the following percentages of the estimated tax liability during the taxable year:

• 30% for the first required installment
• 40% for the second required installment
• No estimated tax payment is required for the third installment
• 30% for the fourth required installment

For exceptions and prior year’s information, get Form 100-ES.

Estimated tax is generally due and payable in four installments as follows:

• The 1st payment is due by the 15th day of the 4th month of the taxable year (this payment may not be less than the minimum franchise tax, if applicable).
• The 2nd, 3rd, and 4th installments are due and payable by the 15th day of the 6th, 9th, and 12th months respectively, of the taxable year.

For purposes of determining the due date of any required installment, a partial month is treated as a full month. Refer to Treas. Reg. Section 1.6655-1(f)(2)(iv) for more information.

California law conforms to the federal expanded annualization periods for the computation of estimate payments. The applicable percentage for estimate basis is 100%.

Get the instructions for Form 100-ES for more information.

If the corporation must pay its tax liability electronically, all estimate payments due must be remitted by EFT, EFW, Web Pay, or credit card to avoid the EFT penalty. See General Information G, Electronic Payments, for more information.

If no amount is due, or if the corporation pays electronically, do not mail Form 100-ES.

L. New/Commencing Corporations

The corporation is required to pay measured tax instead of minimum tax for its first taxable year if the corporation incorporated or registered through the California SOS. For more information, see General Information C, Minimum Franchise Tax, or get FTB Pub. 1060.

M. Penalties

Failure to File a Timely Return

Any corporation that fails to file Form 100W on or before the extended due date is assessed a delinquent filing penalty. The delinquent filing penalty is computed at 5% of the tax due, after allowing for timely payments, for every month that the return is late, up to a maximum of 25%. If a corporation does not file its return by the extended due date, the automatic extension will not apply and the late filing penalty will be assessed from the original due date of the return. See R&TC Section 19131 for more information.

Failure to Pay Total Tax by the Due Date

Any corporation that fails to pay the total tax shown on Form 100W by the original due date is assessed a penalty. The penalty is 5% of the unpaid tax, plus 0.5% for each month, or part of the month (not to exceed 40 months), the tax remains unpaid. This penalty may not exceed 25% of the unpaid tax. See R&TC Section 19132 for more information.

The FTB may waive the late payment penalty based on reasonable cause. Reasonable cause is presumed when 90% of the tax shown on the return, but not less than minimum franchise tax if applicable, is paid by the original due date of the return.

If a corporation is subject to both the penalty for failure to file a timely return and the penalty for failure to pay the total tax by the due date, a combination of the two penalties may be assessed, but the total penalty may not exceed 25% of the unpaid tax.

Underpayment of Estimated Tax

Any corporation that fails to pay, pays late, or underpays an installment of estimated tax is assessed a penalty. The penalty is a percentage of the underpayment of estimated tax for the period from the date the installment was due until the date it is paid, or until the 15th day of the 3rd month after the close of the taxable year, whichever is earlier. Get form FTB 5806 to determine both the amount of underpayment and the amount of penalty.

The underpayment of estimated tax penalty shall not apply to the extent the underpayment of an installment was created or increased by any provision of law that is chaptered during and operative for the taxable year of the underpayment.

See R&TC Sections 19142, 19144, 19145, 19147 through 19151, and 19161 for more information.

If the corporation uses Exception B or Exception C on form FTB 5806 to compute or eliminate any of the required installments, form FTB 5806 must be attached to the back of Form 100W (after all schedules and federal return) and the box on Form 100W, Side 2, line 40b should be checked.

Large Corporate Understatement Penalty (LCUP)

Corporations are subject to the LCUP for the understatement of tax if that understatement exceeds the greater of:

• $1 million, or
• 20% of the tax shown on an original or amended return filed on or before the original or extended due date of the return for the taxable year.

The amount of the penalty is equal to 20% of the understatement of tax. See R&TC Section 19138 for exceptions to the LCUP. For more information, go to ftb.ca.gov and search for lcup.

EFT Penalty

If the corporation must pay its tax liability electronically, all payments must be remitted by EFT, EFW, Web Pay, or credit card to avoid the penalty. The penalty is 10% of the amount not paid electronically. See R&TC Section 19011 and General Information G, Electronic Payments, for more information.

Information Reporting Penalties

Federal Forms 5471 and 8975 – U.S. corporations that have an ownership interest (directly or indirectly) in a foreign corporation and were required to file federal Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations; or federal Form 8975, Country-by-Country Report, and accompanying Schedule A (8975), Tax Jurisdiction and Constituent Entity Information with the federal return, must attach a copy(ies) to the California return. The penalty for failure to include a copy of federal Form(s) 5471 or federal Form 8975 and accompanying Schedule A (8975), as required, is $1,000 per required form for each year the failure occurs. The penalty will not be assessed if the copy of the information required to be filed with the IRS was not attached to the taxpayer’s original return and the taxpayer provides a copy of the form(s) within 90 days of request from the FTB and the taxpayer agrees to attach a copy(ies) of federal Form 5471 or federal Form 8975 and accompanying Schedule A (8975) to all returns filed for subsequent years. See R&TC Section 19141.2 for more information.

Note: Foreign insurance companies that file as domestic companies are exempt from the requirement of filing federal Form 8975 and accompanying Schedule A (8975).

For additional information, refer to the federal Form 8975 instructions.

Federal Form 5472 – Certain domestic corporations that are 25% or more foreign-owned and foreign corporations engaged in a U.S. trade or business must attach a copy(ies) of the federal Form(s) 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, to Form 100W. The penalty for failing to include a copy of federal Form(s) 5472, as required, is $10,000 per required form for each year the failure occurs. See R&TC Section 19141.5 for more information.

If the corporation does not file its Form 100W by the due date or extended due date, whichever is later, copy(ies) of federal Form(s) 5472 must still be filed on time or the penalty will be imposed. Attach a cover letter to the copy(ies) indicating the taxpayer’s name, California corporation number, and taxable year. Mail to the same address used for returns without payments. See General Information H, Where to File, for more information. When the corporation files Form 100W, also attach copy(ies) of the federal Form(s) 5472.

Record Maintenance Penalty

The penalty for failure to maintain certain records is $10,000 for each taxable year for which the failure applies. In addition, if the failure continues for more than 90 days after the FTB notifies the corporation of the failure, in general, a penalty of $10,000 may be assessed for each additional 30-day period of continued failure. There is no maximum amount of penalty that may be assessed.

See “Records Maintenance Requirements” for a discussion of the records required to be maintained. See R&TC Section 19141.6 and the related regulations for more information.

Accuracy and Fraud Related Penalties

California conforms to IRC Sections 6662 through 6665 that authorize the imposition of an accuracy-related penalty equal to 20% of the related underpayment, and the imposition of a fraud penalty equal to 75% of the related underpayment. See R&TC Section 19164 for more information.

California Secretary of State (SOS) Penalty

The California Corporations Code requires the FTB to assess a penalty for failure to file an annual Statement of Information with the California SOS. For more information, see R&TC Section 19141, or contact:

Mail:

Secretary of State
Statement of Information Unit
Attention: Penalties
PO Box 944230
Sacramento CA 94244-2300

Telephone:

916-657-5448

Other Penalties

Other penalties may be imposed for a payment returned for insufficient funds, foreign corporations operating while forfeited or without qualifying to do business in California, and domestic corporations operating while suspended in California. See R&TC Sections 19134 and 19135 for more information.

N. Interest

Interest is due and payable on any tax due if not paid by the original due date of Form 100W. Interest is also due on some penalties. The automatic extension of time to file Form 100W does not stop interest from accruing. California follows federal rules for the calculation of interest. Get FTB Pub. 1138, Business Entity Refund/Billing Information, for more information.

O. Dissolution/Withdrawal

The corporation must check the applicable box on Form 100W, Side 1, Question A, if dissolving, merging or withdrawing. The date should be the date the corporation filed or will file with the California SOS.

The franchise tax for the period in which the corporation formally dissolves or withdraws is measured by the income of the taxable year in which it ceased doing business in California, unless such income has already been taxed at the rate prescribed for the taxable year of dissolution or withdrawal.

A corporation that commenced doing business in California before January 1, 1972, is allowed a credit that may be refunded in the year of dissolution or withdrawal. The amount of the refundable credit is the difference between the minimum franchise tax for the corporation’s first full 12 months of doing business and the total tax paid for the same period.

To claim this credit, add this amount to the value on Form 100W, Side 2, line 34. Make a notation to the right of line 34: “Dissolving/Withdrawing.”

The tax return for the final taxable period is due on or before the 15th day of the 4th full month after the month during which the corporation withdrew or stops doing business in California.

Corporations are subject to income tax or franchise tax for the final taxable period. Corporations that file a final franchise tax return must pay at least the minimum franchise tax as specified in R&TC Section 23153.

The minimum franchise tax will not be assessed after the taxable year for which the final tax return is filed, if a corporation meets all of the following requirements:

• The corporation files a timely final franchise tax return for the preceding taxable year, including extension. The corporation must be in good standing to have an extension to file.
• The corporation did not do business in California after the final taxable year.
• The corporation files the appropriate documents for dissolution or surrender with the California SOS within 12 months of the timely filed final franchise tax return.

Get FTB Pub. 1038, Guide to Dissolve, Surrender, or Cancel a California Business Entity, for more information.

To get samples and forms for filing a dissolution, surrender, or merger agreement, go to sos.ca.gov and search for corporation dissolution, or address the request to:

Mail:

California Secretary of State
Business Entities Filing Unit
PO Box 944260
Sacramento, CA 94244-2600

Telephone:

916-657-5448

P. Ceasing Business

The tax for the final year in which a corporation does business in California is determined according to or measured by its net income for the taxable year during which the corporation ceased doing business.

In any event, the tax for any taxable year shall not be less than the minimum franchise tax. For more information, see R&TC Section 23151.1.

The unreported income on installment obligations, distribution of notes, and distribution of corporate assets (i.e. land, buildings) at a gain must be included in income in the year of cessation. There is no federal law counterpart regarding this issue.

For more information, see R&TC Sections 24672 and 24451.

A domestic or qualified corporation will remain subject to the minimum franchise tax for each taxable year it is in existence until a certificate of dissolution (and certificate of winding up, if necessary), certificate of withdrawal, or certificate of surrender is filed with the California SOS. See General Information O, Dissolution/Withdrawal, R&TC Sections 23331 through 23333, and R&TC Section 23335 for more information.

Q. Suspension/Forfeiture

If a corporation does not file a Form 100W and/or does not pay any tax, penalty, or interest due, its powers, rights, and privileges may be suspended (in the case of a domestic corporation) or forfeited (in the case of a foreign corporation).

Corporations that operate while suspended or forfeited may be subject to a $2,000 penalty per taxable year, which is in addition to any tax, penalties, and interest already accrued. Also, any contracts entered into during suspension or forfeiture are voidable at the request of any party to the contract other than the suspended or forfeited corporation.

Such contracts will remain voidable and unenforceable unless the corporation applies for relief from contract voidability and the FTB grants relief.

See R&TC Sections 19135, 19719, 23301, 23305.1, and 23305.2 for more information, or go to ftb.ca.gov and search for revivor.

R. Apportionment of Income

Corporations with business income attributable to sources both within and outside of California are required to apportion such income. Use Schedule R to calculate the apportionment percentage. Be sure to answer Question M on Form 100W, Side 3.

For more information, see R&TC Sections 25120 through 25136.

R&TC Section 25128.7 requires all business income of an apportioning trade or business, other than an apportioning business under R&TC Section 25128(b), to apportion its business income using the single-sales factor formula.

R&TC Section 25136 requires all taxpayers to assign sales, other than sales of tangible personal property, using market assignment. For more information, see R&TC Section 25136 and Cal. Code Regs., tit. 18 section 25136-2, get Schedule R, or go to ftb.ca.gov and search for market assignment.

S. Combined Report

When filing a combined report, answer the applicable questions on Form 100W, Side 1, Question B.

If two or more corporations are engaged in a unitary business and derive income from sources within and outside of California, the members of the unitary group that are subject to California’s franchise or income tax are required to apportion the combined income of the entire unitary group in order to compute the measure of tax.

If the income of a unitary group is derived wholly from California sources, its members may either file returns on a separate accounting basis or file on a combined report basis. See R&TC Section 25101.15 for more information.

Members of a unitary group may elect to file a single group return by filing Schedule R-7. For more information, get Schedule R and go to Side 6 for Schedule R-7.

Attach the Schedule R behind the Form 100W and prior to the supporting schedules.

A combined unitary group’s single return must present the group’s data stated separately for each corporation, as well as totals for the combined group.

The total combined tax, which must include at least the applicable minimum franchise tax for each corporation subject to the franchise tax, must be shown on Form 100W, Side 2, line 23.

For more information, get FTB Pub. 1061.

T. Water’s-Edge Reporting

Water’s-Edge Combined Report

Entities Included

The water’s-edge combined report includes only the income and apportionment factors of the members of the unitary group that meet the criteria set forth in R&TC Section 25110, as summarized below. If an entity meets any one of these criteria and is unitary, it must be included in the combined report. If an entity does not meet any of these criteria, it must be excluded from the combined report.

1. Any domestic international sales corporation, as defined in IRC Section 992, and any foreign sales corporation, as defined in IRC Section 922.
2. Any corporation (other than a bank), regardless of where it is incorporated, if the average of its property, payroll, and sales factors within the U.S. is 20% or more.
3. Any corporation incorporated in the U.S., except for corporations making an election under IRC Sections 931 to 936.
4. Any export trade corporation as defined in IRC Section 971.
5. Any CFC, as defined in IRC Section 957, that has Subpart F income as defined in IRC Section 952. The income and apportionment factors of such corporation are included in the combined report based on the ratio of the total Subpart F income of such entity for the year to its current year earnings and profits (E&P). The ratio cannot exceed 100% or be less than 0%. If the current year E&P is zero or less, none of the income and factors of the entity are included in the combined report. Subpart F income defined in IRC Sections 955 and 956, is not considered in the computation.
6. Any corporation not described in items 1 through 5 with less than 20% of its average property, payroll, and sales in the U.S., or any foreign organized bank that has income attributable to sources within the U.S. Such entities are included in the combined report only to the extent of their U.S. located income and factors. In general, U.S. located income includes the income that is effectively connected, or is treated as effectively connected, with the conduct of a trade or business in the United States, under the provisions of the IRC. Because California is not a party to the federal tax treaties, the effectively connected income (ECI) immunity provisions of the federal tax treaties do not apply for California purposes. Any income satisfying the IRC definition of ECI, that is excluded from federal taxable income due to a tax treaty, is included for California purposes.

If a corporation meets the inclusion criteria under both items 5 and 6 above, it must include both items of income in the water’s-edge combined report. A CFC cannot exclude from the water’s-edge combined report its income determined under the Subpart F income inclusion ratio rule, even if it is a California taxpayer or has income from a U.S. source.

For more information, see R&TC Section 25110(a) and the regulations thereunder.

A taxpayer that is filing on a water’s-edge basis for one or more lines of business should use Form 100W even though that taxpayer may also have one or more lines of business that are not on a water’s-edge basis.

Intercompany Transactions Occurring On or After January 1, 2001

Cal. Code Regs., tit. 18 Section 25106.5-1 provides detailed rules relating to the treatment of intercompany transactions between members of a combined reporting group. These regulations apply to all intercompany transactions that occur on or after January 1, 2001. In general, the regulations adopt the treatment of intercompany transactions applicable for federal consolidated return purposes.

For more information, see Cal. Code Regs., tit. 18 Section 25106.5-1, and FTB Pub. 1061. In addition, taxpayers may wish to review the federal consolidated return treatment of intercompany transactions as prescribed by Treas. Reg Section 1.1502-13.

Intercompany Transactions Occurring Before January 1, 2001

Intercompany transactions that occurred prior to January 1, 2001, are treated as follows:

1. If a combined group has deferred gain or loss from intercompany transactions, a water’s-edge election under R&TC Section 25111 will cause certain previously deferred gains or losses to be taxed over a 60-month period beginning with the first day of the election period. This applies only to transactions where either the transferee, the transferor, or both, are to be excluded from a combined report by reason of the water’s-edge election. It does not apply if both the transferor and the transferee are included in the water’s-edge combination.
2. Generally, such gains or losses will be apportioned using the percentage used in the last worldwide combined report that preceded the first water’s-edge year. FTB Notice 89-601 provides that the percentage in the year of the original transaction can be used in certain circumstances.

The deferral method referred to in FTB Notice 89-601 applies to intercompany transactions involving fixed assets and capitalized items only. Certain other types of intercompany transactions, including intercompany sales of inventory and intangible assets, must be reported under the elimination/carryover basis method. When members of a combined group use the elimination/carryover basis method, the transferor’s basis will carry over to the transferee.

A subsequent water’s-edge election will have no effect on the recognition of profit under this method. Any profit eliminated as a result of using this method would be recognized by the transferee when the asset is sold outside the combined reporting group.

Water’s-Edge Election

R&TC Section 25113 governs the manner of making a water’s-edge election. R&TC Section 25113:

• Provides that the FTB may accept other objective evidence that a water’s-edge election is intended.
• Reforms the acquisition rules so that a taxpayer’s water’s-edge election would no longer automatically apply to other non-electing affiliates with which it becomes unitary. Instead, when two or more taxpayers become unitary, the status of the larger taxpayer would prevail.
• Eliminates the automatic renewal provisions. The taxpayer elects for an initial 84-month period and the election remains in place thereafter until terminated.

To make a water’s-edge election under R&TC Section 25113, a corporation must:

• Compute the corporation’s tax on a water’s-edge basis.
• Use Form 100W.
• Attach Form 100-WE, Water’s-Edge Election, to the timely filed original return for the year of the election.

To file on a water’s-edge basis, the corporation must do all of the following:

• File on a water’s-edge basis for a period of 84 months.
• Agree to business income treatment of dividends received from any of the following:
  1. Over 50% owned entities engaged in the same general line of business as the members of the water’s-edge group.
  2. Entities that are a significant source of supply to, or a significant purchaser of, the output of the members of the water’s-edge group. Significant means an amount equal to 15% or more.
• Consent to the taking of depositions from key employees or officers of the members of the water’s-edge group and to the acceptance of subpoenas duces tecum requiring the reasonable production of documents.

For more information, see R&TC Sections 25110(b), 25113, and the regulations thereunder.

Taxpayers Covered by an Election

For an election to be effective, all affiliated taxpayers engaged in a single unitary business must file on a water’s-edge basis. A taxpayer or an affiliated group of taxpayers that is engaged in more than one unitary business may make a water’s-edge election with respect to any one or more of its businesses, but need not elect for all of its businesses. For example, a taxpayer engaged in two unitary businesses may elect water’s-edge for one of the businesses and may remain subject to worldwide combined reporting treatment for the other business.

The common parent of a controlled group that files a consolidated federal return, or the common parent wherever domiciled or organized, may file an election on behalf of all members of the controlled group that are part of the water’s-edge combined report group. The common parent need not be a California taxpayer. An election made on a group return of a self-assessed combined reporting group shall constitute an election by each taxpayer member included in that group return.

In cases where the water’s-edge election is not entered into by a common parent, each taxpayer included in the combined report must enter into a separate election.

Time of Making the Election

The election must be made by all unitary taxpayers, included in the combined report, on a timely filed original return for the year of the election. Use Form 100-WE to make the election. Attach the completed Form 100-WE to the timely filed original return Form 100W. Attach a copy of the original election to all subsequent returns filed during the election period.

Taxpayers with valid elections made prior to January 1, 2003, continue to file on a water’s-edge basis and are subject to the provisions of R&TC Section 25113. The start date, as elected under R&TC Section 25111, remains in effect.

The election must be made on a timely filed original return. See R&TC Section 25113 and Cal. Code Regs., tit. 18 Section 25113.

Taxpayers with Different Fiscal Year Ends

Taxpayers engaged in a unitary business with different fiscal year ends will make the election on each individual return. For each member of the group, the election period will begin on the first day of the taxable year of the last member of the water’s-edge group to file its return and make the election. Each taxpayer that has a taxable year beginning earlier than the last member of the group will compute its tax liability on its initial return using a hybrid worldwide/water’s-edge combination method.

Effect of Changes in Affiliation

If a corporation that is subject to California tax becomes a member of a water’s-edge group, or if a unitary affiliate of an electing water’s-edge group becomes subject to California tax after the election, it is deemed to have elected and is bound by the original election. When a taxpayer ceases to be a member of the water’s-edge group, the taxpayer must continue to file on a water’s-edge basis.

If an electing taxpayer is acquired by a nonelecting taxpayer and becomes a member of a new affiliated group, then the filing method, worldwide or water’s-edge, would be determined by reference to the larger taxpayer group. The larger taxpayer group is determined by comparing the value of the total business assets of the electing taxpayer and its component unitary group to the value of the total business assets of the nonelecting taxpayer and its component unitary group.

If a water’s-edge taxpayer meets certain criteria, it may automatically terminate the water’s-edge election or it may request the FTB’s consent to terminate its water’s-edge election. See “Termination of Election” section.

A non-electing taxpayer that is subsequently proven to be unitary with a water’s-edge group pursuant to an audit determination of the FTB is deemed to have made a water’s-edge election.

When an affiliation change occurs, a statement should be attached to the return identifying which affiliates were included in the original group, the appropriate California corporation numbers, and what changes have occurred.

For more information, see R&TC Section 25113 and Cal. Code Regs., tit. 18 Section 25113.

Termination of Election

Once a valid water’s-edge election is made, the election remains in place until it is terminated.

Termination After Expiration of the Initial 84-Month Period

The taxpayer has the option to terminate its water’s-edge election after the initial 84-month period. This termination does not require the FTB’s consent. The termination must be made on an original, timely filed return for the first year in which the water’s-edge election is to be terminated.

To terminate the corporation’s water’s-edge election after the 84-month period do all of the following:

• Compute the corporation’s tax on a worldwide basis.
• Use Form 100.
• Attach a statement to the Form 100, explaining that the corporation is terminating its water’s-edge election. Provide the name of any taxpayer that was bound by the water’s-edge election.

If a taxpayer terminates its election, it must file on a worldwide basis for at least 84 months before making another water’s-edge election. The FTB may waive application of this rule for good cause. Good cause for these purposes has the same meaning as described in Treas. Reg. Section 1.1502-75(c).

Termination Before Expiration of the Initial 84-Month Period

Termination Caused by Affiliation Change – In the case of an affiliation change, as discussed in the “Effect of Changes in Affiliation” section, if an electing water’s-edge taxpayer becomes a member of a larger, nonelecting taxpayer group, then the taxpayer’s water’s-edge election is automatically terminated. The termination is effective at the time the electing taxpayer becomes part of the combined report of the larger, nonelecting taxpayer group. It is not necessary to file a form FTB 1117, Request to Terminate Water’s-Edge Election.

Termination by the FTB’s Consent – An electing taxpayer may request the FTB’s consent to terminate the water’s-edge election for good cause or to permit the state to contract with an expatriate corporation, or its subsidiary pursuant to Public Contract Code Section 10286.1(b)(2) prior to the expiration of the 84-month period. Good cause for these purposes has the same meaning as described in Treas. Reg. Section 1.1502-75(c).

If the FTB grants the taxpayer’s request to terminate its water’s-edge election, the taxpayer must file on a worldwide basis for at least 84 months before making another water’s-edge election. The FTB may waive the application of this rule for good cause.

To request termination of a water’s-edge election, the corporation must timely file form FTB 1117 separately from any other form.

Mail form FTB 1117 to:

Mail

Franchise Tax Board
PO Box 1779
Rancho Cordova CA 95741-1779

For more information, see R&TC Section 25113 and Cal. Code Regs., tit. 18 Section 25113.

Request for Consent for a Water’s-Edge Re-Election

Use form FTB 1115, Request for Consent for a Water’s-Edge Re-Election, to request the FTB’s consent to re-elect water’s-edge prior to the expiration of the 84-month period following the last day of the terminated election, for good cause as provided in R&TC Section 25113(c)(11). See form FTB 1115 instructions for more information.

U. Amended Return

To correct or change a previously filed Form 100W, file the most current Form 100X. Using the incorrect form may delay processing of the amended return. File Form 100X within six months after the corporation filed an amended federal return or after a final federal determination, if the IRS examined and changed the corporation’s federal return.

V. Information Returns

Like-Kind Exchanges

California requires taxpayers who exchange property located in California for like-kind property located outside of California under IRC Section 1031, to file an annual information return with the FTB. For more information, get form FTB 3840, California Like-Kind Exchanges, or go to ftb.ca.gov and search for like kind.

Payments

Every corporation engaged in a trade or business and making or receiving certain payments in the course of the trade or business is required to file information returns to report the amount of such payments.

Payments that must be reported include, but are not limited to the following:

• Annual payments of $600 or more for compensation for services not subject to withholding, commissions, fees, prizes and awards, payments to independent contractors, rents, royalties, legal services whether or not the payee is incorporated, interest (such as interest charged for late payment), and pensions.
• Annual payments of $10 or more for interest earned and dividends.
• All payment amounts made by a broker or barter exchange.
• All payment amounts for gross proceeds paid to an attorney whether or not the services are performed for the payer.
• Cash payments over $10,000 received in a trade or business.

See instructions for federal Forms 1099 (series), 1098, 5498, and W-2G; federal Publication 1220, Specifications for Electronic Filing of Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G; and federal Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, for the applicable due dates.

Report payments to the FTB and the IRS using the appropriate federal form. Reports must be made for the calendar year.

Interest on Municipal Bonds

California requires corporations to report to the FTB, interest paid on municipal bonds held by California taxpayers and issued by a state other than California, or a municipality other than a California municipality. Entities paying interest to California residents on these types of bonds are required to report interest payments aggregating $10 or more and paid after January 1, 2021. These information returns will be due June 1, 2022. For more information, get form FTB 4800 MEO, Federally Tax Exempt Non-California Bond Interest and Interest-Dividend Payment Information Media Transmittal.

IRC Sections 6038 through 6038D

California conforms to the information reporting requirements imposed under IRC Sections 6038 through 6038D. If the corporation files any of the following federal information returns, a copy of the federal return must be filed with California as well:

• Federal Form 5471
• Federal Form 5472
• Federal Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation
• Federal Form 8938, Statement of Specified Foreign Financial Assets
• Federal Form 8975*
• Schedule A (8975)*

*Foreign insurance companies that file as domestic companies are exempt from the requirement of filing federal Form 8975 and accompanying Schedule A (8975).

For additional information, refer to federal Form 8975 instructions.

Attach a copy of each federal information return to the California tax return.

If these federal information returns are not provided, penalties may be imposed under R&TC Sections 19141.2 and 19141.5. See General Information M, Penalties, for more information.

W. Net Operating Loss (NOL)

For taxable years beginning on or after January 1, 2020, and before January 1, 2023, California has suspended the NOL carryover deduction. Corporations may continue to compute and carryover an NOL during the suspension period. However, corporations with taxable income of less than $1,000,000 or with disaster loss carryovers are not affected by the NOL suspension rules.

The carryover period for suspended losses is extended by:

• Three years for losses incurred in taxable years beginning before January 1, 2020.
• Two years for losses incurred in taxable years beginning on or after January 1, 2020, and before January 1, 2021.
• One year for losses incurred in taxable years beginning on or after January 1, 2021, and before January 1, 2022.

For more information, see R&TC Section 24416.23.

For taxable years beginning on or after January 1, 2019, NOL carrybacks are not allowed.

For taxable years beginning in 2010 and 2011, California suspended the NOL carryovers deduction. Corporations continued to compute and carryover an NOL during the suspension period. However, corporations with net income after state adjustments (pre-apportioned income) of less than $300,000 or with disaster loss carryovers were not affected by the NOL suspension rules.

NOL carryovers incurred prior to the water’s‑edge election are limited to the amount of NOL that the taxpayer would have incurred if a water’s‑edge election had been in effect in the loss year.

R&TC Sections 24416 through 24416.7, R&TC Sections 24416.21 through 24416.23, and R&TC Section 25108 provide for NOL deductions incurred in the conduct of a trade or business.

R&TC Sections 24347.5 and 24347.11 through 24347.13 provide the treatment for disaster losses incurred in an area declared by the President of the United States or the Governor of California as a disaster area.

For taxable years beginning on or after January 1, 2014, and before January 1, 2024, taxpayers may deduct a disaster loss sustained in any city, county, or city and county in California that is proclaimed by the Governor to be in a state of emergency. For these Governor-only declared disasters, subsequent state legislation is not required to activate the disaster loss provisions. See R&TC Section 24347.14 for more information.

Losses taken into account under the disaster provisions may not be included in computing regular NOL deductions.

For more information, see form FTB 3805Q included in this booklet, or get form FTB 3805Z, Enterprise Zone Deduction and Credit Summary; form FTB 3807, Local Agency Military Base Recovery Area Deduction and Credit Summary; or form FTB 3809, Targeted Tax Area Deduction and Credit Summary.

X. Signatures

Phone Number and Email Address

Include the officer’s phone number and email address in case the FTB needs to contact the corporation for information needed to process this return. By providing this information the FTB will be able to process the return or issue the refund faster.

Preparer Tax Identification Number (PTIN)

Tax preparers must provide their PTIN on the tax returns they prepare. Preparers who want a PTIN should go to the IRS website at irs.gov and search for ptin.

Paid Preparer Authorization

If the corporation wants to allow the FTB to discuss its 2021 tax return with the paid preparer who signed it, check the “Yes” box in the signature area of the return. This authorization applies only to the individual whose signature appears in the “Paid Preparer’s Use Only” section of the return. It does not apply to the firm, if any, shown in that section.

If the “Yes” box is checked, the corporation is authorizing the FTB to call the paid preparer to answer any questions that may arise during the processing of the tax return. The corporation is also authorizing the paid preparer to:

• Give the FTB any information that is missing from the tax return.
• Call the FTB for information about the processing of the tax return or the status of any related refund or payments.
• Respond to certain FTB notices about math errors, offsets, and tax return preparation.

The corporation is not authorizing the paid preparer to receive any refund check, bind the corporation to anything (including any additional tax liability), or otherwise represent the corporation before the FTB.

The authorization will automatically end no later than the due date (without regard to extensions) for filing the corporation’s 2022 tax return. If the corporation wants to expand the paid preparer’s authorization, go to ftb.ca.gov/poa. If the corporation wants to revoke the authorization before it ends, notify the FTB in writing or call 800-852-5711.

Y. Limited Liability Companies (LLCs)

California law authorizes the formation of LLCs and recognizes out-of-state LLCs registered or doing business in California. The taxation of an LLC in California depends upon its classification as a corporation, partnership, or “disregarded entity” for federal tax purposes.

If an LLC elects to be taxed as a corporation for federal tax purposes, the LLC must file Form 100W, Form 100-ES, form FTB 3539, and/or form FTB 3586 and enter the California corporation number, FEIN, and California SOS file number, if applicable, in the space provided. The FTB will (1) assign an identification number to an LLC that files as a corporation, and (2) notify the LLC with the identification number upon receipt of the first estimated tax payment, first tax payment, or the first tax return. The LLC will be subject to the applicable provisions of the Corporation Tax Law and should be considered a corporation for purpose of all instructions unless otherwise indicated.

If an LLC elects to be taxed as a partnership for federal tax purposes, it must file Form 568. LLCs taxed as partnerships determine their income, deductions, and credits under the Personal Income Tax Law and are subject to an annual tax as well as an annual fee based on total income.

If an SMLLC is disregarded for federal tax purposes, get Form 568, Limited Liability Company Tax Booklet, for information regarding SMLLC filing requirements. A disregarded LLC reports its income, deductions, and credits on the return of its owner. However, an LLC that is disregarded is required to file Form 568 and pay the annual LLC tax as well as the LLC fee (if applicable) based on total income. Form 568, Side 1, provides the FTB with information on the sole owner of the LLC, contains the owner’s consent to be taxed on the income of the LLC, and provides for the computation of the LLC tax and fee.

Z. Withholding

Effective January 1, 2020, the real estate withholding forms and instructions have been consolidated into one new Form 593, Real Estate Withholding Statement. For more information, get Form 593.

With certain limited exceptions, payers that are required to withhold and remit backup withholding to the IRS are also required to withhold and remit to the FTB on income sourced to California. If the corporation (payee) has backup withholding, the corporation (payee) must contact the FTB to provide a valid taxpayer identification number, before filing the tax return. Failure to provide a valid taxpayer identification number may result in a denial of the backup withholding credit. For more information, go to ftb.ca.gov and search for backup withholding.

R&TC Section 18662 requires buyers to withhold income taxes when purchasing California real property from corporate sellers with no permanent place of business in California immediately after the transfer. For more information, get FTB Pub. 1016, Real Estate Withholding Guidelines.

Sellers of California real estate must attach a copy of Form 593 to their tax return as proof of withholding.

If the corporation needs to verify withholding payments, the corporation may call Withholding Services and Compliance at 916-845-4900 or 888-792-4900.

For transactions that require withholding, a seller of California real estate may elect an alternative to withholding 3 1/3% of the total sales price. The seller may elect an alternative withholding amount based on the maximum tax rate for individuals, corporations, or banks and financial corporations, as applied to the gain on the sale. The seller is required to certify under penalty of perjury the alternative withholding amount to the FTB. For more information, get FTB Pub. 1016.

Specific Line Instructions

Corporations that are not filing on water’s-edge basis should use Form 100.

Filing Form 100W without errors will expedite processing. Before mailing Form 100W, make sure entries have been made for the following:

• California corporation number (assigned by the California SOS).
• Federal employer identification number (FEIN).
• California SOS file number, if applicable.
• Corporation name (use the legal name filed with the California SOS) and address (include PMB no., if applicable).
• Use the additional information field for “Owner/Representative/Attention” name, and other supplemental address information only.
• If the corporation has a foreign address, follow the country’s practice for entering the city, county, province, state, country, and postal code, as applicable, in the appropriate boxes. Do not abbreviate the country name.

If an LLC elects to be taxed as a corporation for federal tax purposes, see General Information Y, Limited Liability Companies (LLCs), for more information.

File the 2021 Form 100W for calendar year 2021 and fiscal year that begins in 2021. Enter taxable year beginning and ending dates only if the return is for a short year or a fiscal year. If a domestic corporation files the first California tax return, the fiscal year beginning date must be the date the corporation is incorporated. If the corporation reports its income using a calendar year, leave the date area blank. If the return is being filed for a short period (less than 12 months), write “short year” in black or blue ink in the top margin. Convert all foreign monetary amounts to U.S. dollars.

The 2021 Form 100W may also be used if both of the following apply:

• The corporation has a taxable year of less than 12 months that begins and ends in 2022.
• The 2022 Form 100W is not available at the time the corporation is required to file its return. The corporation must show its 2022 taxable year on the 2021 Form 100W and incorporate any tax law changes that are effective for taxable years beginning after December 31, 2021.

Questions A through CC

Answer all applicable questions and attach additional sheets, if necessary. Be sure to answer Questions D through CC on Form 100W, Side 2 and Side 3. Use the following instructions when answering:

Question B – Combined report information

If the answer to Question B1 is:

• “Yes,” make sure to complete all the questions listed
• “No,” skip Questions B2 and B3 and go to Question B4

Question B4 – FTB 3544

Check the “Yes” box if form FTB 3544 is attached to Form 100W.

Question C – Transfer or acquisition of voting stock

All corporations must answer all three questions. The questions provide information regarding changes in control or ownership of legal entities owning or under certain circumstances leasing California real property (R&TC Section 64). (Real property includes land, buildings, structures, fixtures – see R&TC Section 104 for more information.)

If any of the answers are “Yes”, a Statement of Change in Control and Ownership of Legal Entities, must be filed with the State of California; failure to do so within 90 days of the event date will result in penalties. The form for this statement is form BOE-100-B filed with the California State Board of Equalization (BOE). Get this form and information from the BOE website (boe.ca.gov) by searching for Legal Entity Ownership Program (LEOP).

There may be a change in ownership or control if, during this taxable year, one of the following occurred with respect to this corporation or any of its subsidiaries:

• The percentage of outstanding voting shares transferred to, or owned or controlled by, one person or one legal entity cumulatively exceeded 50%.
• The total outstanding voting shares transferred to or held by one irrevocable trust or trust beneficiary cumulatively exceeded 50%.
• One or more irrevocable proxies cumulatively transferred voting rights to more than 50% of the outstanding voting shares to one person or one entity.
• This corporation, or any of its subsidiaries, cumulatively acquired ownership or control of more than 50% of the outstanding voting shares or other ownership interests in any legal entity; or
• As of the end of this taxable year, cumulatively more than 50% of the total outstanding voting shares have been transferred in one or more transactions since an interest in California real property was transferred to the corporation that was excluded from property tax reassessment under R&TC Section 62(a)(2) which established an original co-owners’ interest status.

For purposes of these questions, leased real property is a leasehold interest in taxable real property: (1) leased for a term of 35 years or more (including renewal options), if not leased from a government agency; or (2) leased for any term, if leased from a government agency.

R&TC Section 64(e) requires this information for use in determining whether a change in ownership has occurred under Section 64(c) and (d); it is used by the LEOP.

Question F – Principal business activity (PBA) code

All corporations must answer Question F.

Include the six digit PBA code from the Principal Business Activity Codes chart included in this booklet. The code should be the number for the specific industry group from which the greatest percentage of California “total receipts” is derived. “Total receipts” means gross receipts plus all other income. The California PBA code may be different from the federal PBA code.

If, as its principal business activity, the corporation: (1) Purchases raw material. (2) Subcontracts out for labor to make a finished product from the raw materials. (3) Retains title to the goods, the corporation is considered to be a manufacturer and must enter one of the codes under “Manufacturing.” Also, write in the business activity and the principal product or service on the lines provided.

Question J – Doing business as (DBA)

Corporations doing business under a name other than that entered on Side 1 of Form 100W must enter the DBA name in Question J. If the corporation is doing business under multiple DBAs attach a schedule listing all DBAs.

Leave Question J blank if the corporation is not using a DBA to conduct business.

Question L – Reportable transaction or listed transaction

Federal Form 8886 is required to be attached to any return on which a deduction, loss, credit, or any other tax benefit is claimed or is reported, or any income the corporation reported from an interest in a reportable transaction. If the corporation is required to file this form with the federal return, attach a copy to the corporation’s Form 100W.

A material advisor is required to provide a reportable transaction number to all taxpayers and material advisors for whom the material advisor acts as a material advisor.

A Reportable Transaction is any transaction as defined in R&TC Section 18407 and Treas. Reg. Section 1.6011-4 and includes, but is not limited to the following:

• A Listed Transaction, or a transaction that is substantially similar to a Listed Transaction, which has been identified by the IRS or the FTB to be a tax avoidance transaction.
• A Confidential Transaction which is offered to a taxpayer under conditions of confidentiality and for which the taxpayer has paid a minimum fee.
• A transaction with contractual protections which provides the taxpayer with the right to a full or partial refund of fees if all or part of the intended tax consequences from the transaction are not sustained.
• A loss transaction under IRC Section 165 which is at least $10 million in any one year or $20 million in any combination of taxable years.
• A transaction of interest is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest (entered into after November 1, 2006).
• A transaction with a significant book-tax difference (entered into prior to August 3, 2007). Beginning January 6, 2006, this transaction was no longer required to be disclosed on Form 8886. See IRS Notice 2006-6.
• A transaction where the taxpayer is claiming a tax credit of greater than $250,000 and held the asset for less than 45 days (entered into prior to August 3, 2007).

Question S – Regulated investment company (RIC)

R&TC Section 24870 indicates that Subchapter M of Chapter 1 of Subtitle A of the IRC, relating to RICs and REITs, shall apply, except as otherwise provided in this part. Also, refer to R&TC Section 24871 for more information.

Question T – Real estate mortgage investment conduit (REMIC)

If a corporation is a REMIC for federal purposes, it will generally be a REMIC for California purposes. A REMIC is subject to the minimum franchise tax but is not subject to the income or franchise tax. The income of a REMIC is taxable to the holders of the REMIC interests. In order to qualify, substantially all of the assets of the entity must consist of “qualified mortgages” and “permitted investments.” See the instructions for federal Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, to determine if the corporation qualifies. California law is the same as federal law, except California does not impose a tax on prohibited transactions, as defined in IRC Section 860F. The income or gain from such prohibited transactions remains includible in the California tax base. If the corporation is a REMIC for federal purposes, answer “Yes” to Question T, complete Form 100W and attach a copy of federal Form 1066.

Question U1 – Real estate investment trust (REIT)

California tax law has partially conformed to the REIT provisions of the Ticket to Work and Work Incentives Improvement Act of 1999 (Public Law 106-170), except for the provisions relating to income from redetermined rents, redetermined deductions, and excess interest. Additionally, a federal election to treat property as foreclosure property under IRC Section 856(e)(5) is considered to be an election for California as well. No separate elections are allowed.

Question U2 - REIT Subsidiaries

If the entity owns any qualified REIT subsidiaries that are incorporated or qualified with the California Secretary of State, provide a statement with the name, California corporation number, and FEIN for each entity.

Question V – Limited liability company (LLC) or limited partnership (LP)

Answer “Yes” only if the business entity for which the Form 100W is being filed is organized as an LLC or LP but is classified as a corporation for federal tax purposes. An LLC classified as a partnership for federal purposes should generally file Form 568. An LP should file Form 565.

Question Z – Corporations that own 80% of an insurance company

One of the provisions of R&TC Section 24410 includes a reporting requirement to the Legislature. To meet this requirement, the FTB may contact any corporation who answers “Yes” for additional information.

Question CC – Do Not Round Cents to Dollars

On line CC 3, do not round cents to the nearest whole dollar. Enter the amounts with dollars and cents as actually remitted.

Line 1 through Line 41

Note: Do not include IRC Section 965 and 951A amounts.

Line 1 – Net income (loss) before state adjustments

Corporations using the federal reconciliation method to figure net income (see General Information I, Net Income Computation) must:

• Transfer the amount from federal Form 1120, line 28, to Form 100W, Side 1, line 1; and attach a copy of the federal return and all pertinent supporting schedules; or copy the information from federal Form 1120, Page 1, onto Form 100W, Side 4, Schedule F and transfer the amount from Schedule F, line 29, to Form 100W, Side 1, line 1.
• Then, complete Form 100W, Side 1 and Side 2, line 2 through line 16, State Adjustments.

Corporations using the California computation method to figure net income (see General Information I) must transfer the amount from Form 100W, Side 4, Schedule F, line 29, to Side 1, line 1. Complete Form 100W, Side 1 and Side 2, line 2 through line 16, only if applicable.

Line 2 through Line 16 – State adjustments

To figure net income for California purposes, corporations using the federal reconciliation method must enter California adjustments to the federal net income on line 2 through line 16. If a specific line for the adjustment is not on Form 100W, corporations must enter the adjustment on line 8, Other additions, or line 15, Other deductions, and attach a schedule that explains the adjustment.

Line 2 and Line 3 – Taxes not deductible

California does not permit a deduction of California corporation franchise or income taxes or any other taxes on, according to, or measured by income or profits. Such taxes that are shown on Form 100W, Schedule A, must be added to income by entering the amount on Side 1, line 2 or line 3. See Schedule A, column (d) for the amount to be added to income.

R&TC Section 17942 provides that the LLC fee is not a tax. Therefore, it is deductible. Do not include any part of an LLC fee on line 2 or line 3.

Line 4 – Interest on government obligations

Corporations subject to California franchise tax must report all interest received on government obligations (such as federal, state, or municipal bonds). On line 4, enter all interest on government obligations that is not included in the federal ordinary income (loss).

Corporations subject to California corporation income tax, see instructions for line 15.

Line 5 – Net California capital gain

Complete Schedule D, on Side 6 of Form 100W, and enter the California net capital gain from Schedule D, line 11 on Form 100W, line 5.

Get FTB Pub. 1061 for instructions on determining the net capital gain when a combined report is filed.

Line 6 and Line 12 – Depreciation and amortization

California law is substantially different from federal law for corporations.

Complete form FTB 3885, included in this booklet, to determine the amounts to enter on line 6 or line 12.

Line 7a – Net income from Included Controlled Foreign Corporations (CFCs)

R&TC Section 25110(a)(2)(A) provides that a portion of the income and apportionment factors of any CFC (defined in IRC Section 957) that has Subpart F income, as defined in IRC Section 952, must be included in the combined report of a taxpayer making a water’s-edge election. Complete and attach form FTB 2416 included in this booklet, to compute the amount to enter on line 7a.

Line 7b – Income not included in federal consolidated return

Use this line to report the net income from corporations included in the combined report but not included in the federal consolidated return.

Line 8 – Other additions

R&TC Section 24425 disallows expenses allocable to income, which is not included in the measure of the Franchise Tax or Income Tax. Add back such deductions on this line. Also, any miscellaneous items that must be added to arrive at net income after state adjustments (line 17) should be shown on this line. Attach a schedule to itemize amounts.

If any federal contribution deduction was taken in arriving at the amount entered on Form 100W, Side 1, line 1, include that amount on line 8.

Restaurant Revitalization Grants. The ARPA enacted on March 11, 2021, allows an exclusion from gross income for restaurant revitalization grants awarded to eligible entities that are used for allowable expenses for the covered period. California law does not conform to this federal provision. For California purposes, enter the amount excluded from federal income on line 8.

Shuttered Venue Operator Grants. The CAA, 2021, enacted on December 27, 2020, allows an exclusion from gross income for grants received by shuttered venue operators. California law does not conform to this federal provision. For California purposes, enter the amount excluded from federal income on line 8.

Paycheck Protection Program Loans Forgiveness. Under federal law, the CAA, 2021 allows deductions for eligible expenses paid for with covered loan amounts. California law conforms to this federal provision with modifications. For California purposes, if you are an ineligible entity and deducted eligible expenses for federal purposes, include this amount on line 8.

Also, the ARPA expands PPP eligibility to include “additional covered nonprofit entities” which includes certain Code 501(c) nonprofit organizations and Internet-only news publishers and Internet-only periodical publishers. California law does not conform to this expansion of PPP eligibility. If you met the PPP eligibility requirements and excluded the amount from gross income for federal purposes, include this amount on line 8.

Other Loan Forgiveness. Under federal law, the CAA, 2021 allows deductions for eligible expenses paid for with covered loan amounts. California law conforms to this federal provision, with modifications. For California purposes, if you are an ineligible entity and deducted eligible expenses for federal purposes, enter the total amount of those expenses deducted on line 8.

California Ordinary Net Gain or Loss. Enter any California ordinary net gain or loss from Schedule D-1, Sales of Business Property. Attach Schedule D-1.

Penalty Assessed by Professional Sports League. California does not allow a business expense deduction for any fine or penalty paid or incurred by an owner of a professional sports franchise assessed or imposed by the professional sports league that includes that franchise. If the corporation deducted the fine or penalty for federal purposes, include the amount on line 8.

Line 10 and Line 11 – Dividends

Complete Schedule H (100W), Dividend Income Deduction – Water’s-Edge Filers, included in this booklet. Enter the total amount from Schedule H (100W), Part I, line 4, column (d), on Form 100W, Side 2, line 10. Enter the total amount from Part II, line 4, column (g), on Form 100W, Side 2, line 11a. Enter the total amount from Part III, line 4, column (g), on Form 100W, Side 2, line 11b.

Foreign Investment Interest Offset
R&TC Section 24344(c) provides that interest expense incurred for purposes of foreign investment is offset against the water’s-edge dividends deductible under R&TC Section 24411. The offset cannot be greater than the deduction allowed pursuant to R&TC Section 24411. Complete and attach form FTB 2424, Water’s-Edge Foreign Investment Interest Offset, to the return. For more information, see the instructions for form FTB 2424 included in this booklet.

Line 13 – Capital gain from federal

Enter the federal capital gain net income from federal Form 1120, line 8. The California net capital gain should have been added to income on line 5.

Line 14 – Charitable contributions

The charitable contribution deduction for a California corporation is limited to the adjusted basis of the assets being contributed.

The deduction is limited to 10% of California net income without regard to charitable contribution. Carryover provisions per IRC Section 170(d)(2) apply for excess charitable contributions made during the taxable year.

For taxable years beginning on or after January 1, 2014, and before January 1, 2023, do not include any amounts taken into account for the College Access Tax Credit as a contribution deduction on line 14.

On a separate worksheet, using the Form 100W format, complete Form 100W, Side 1 and Side 2, line 1 through line 17 without regard to line 14, Contributions. If any federal charitable contribution deduction was taken in arriving at the amount entered on Side 1, line 1, enter that amount as a positive number on line 8. Enter the adjusted basis of the assets contributed on line 5 of the worksheet. Then complete the worksheet that follows to determine the charitable contributions to enter on line 14.

1. Net income after state adjustments from Side 2, line 17.
2. Deduction for dividends received.
3. Net income for contribution calculation purposes. Add line 1 and line 2.
4. Charitable Contributions. Multiply line 3 by 10% (.10).
5. Enter the amount actually contributed.
6. Enter the smaller of line 4 or line 5 here and on Side 2, line 14.

Get Schedule R to figure the charitable contribution computation for apportioning corporations.

Line 15 – Other deductions

Include on this line deductions not claimed on any other line. Attach a schedule that clearly shows how each deduction was computed and explain the basis for the deduction.

For corporations subject to income tax (instead of the franchise tax), interest received on obligations of the federal government and on obligations of the State of California and its political subdivisions is exempt from income tax. If such interest is reported on line 4, it must be deducted on line 15.

California Microbusiness COVID-19 Relief Grant. California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Microbusiness COVID-19 Relief Program that is administered by CalOSBA. Federal law has no similar exclusion. Enter on line 15 the amount of this type of income.

California Venues Grant. California law allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the California Venues Grant Program that is administered by CalOSBA. Federal law has no similar exclusion. Enter on line 15 the amount of this type of income.

Small Business COVID-19 Relief Grant Program. California allows an exclusion from gross income for grant allocations received by a taxpayer pursuant to the COVID-19 Relief Grant under Executive Order No. E 20/21-182 and the California Small Business COVID-19 Relief Grant Program established by Section 12100.83 of the Government Code. If the corporation included any amount as income for federal purposes, deduct the amount on line 15.

Federal Ordinary Net Gain or Loss. Enter any federal ordinary net gain or loss from federal Form 4797, Sales of Business Property.

Financial Incentive for Seismic Improvement. California allows an exclusion from gross income for any amount received as a loan forgiveness, grant, credit, rebate, voucher, or other financial incentive issued by the California Residential Mitigation Program or the California Earthquake Authority to assist a residential property owner or occupant with expenses paid, or obligations incurred, for earthquake loss mitigation. If the corporation included any amount as income for federal purposes, deduct the amount on line 15.

Line 18 – Net income (loss) for state purposes

If all corporate income is derived from California sources, transfer the amount on line 17 directly to line 18.

If only a portion of income is derived from California sources, complete Schedule R before entering any amount on line 18. Transfer the amount from Schedule R, line 35, to Form 100W, line 18. Be sure to answer "Yes" to Question M on Form 100W, Side 3.

If this line is a net loss, complete and attach the 2021 form FTB 3805Q to Form 100W.

Public Law 86-272. Corporations not filing a combined report and who meet the protections of Public Law 86-272 are exempt from state taxes based upon, or measured by, net income. However, they still are subject to the annual minimum franchise tax if they are doing business in, incorporated in, or qualified to transact intrastate business in, California. If corporations are claiming immunity in California under Public Law 86-272, do not include their net income or loss on line 18 and write "PL 86-272" at the top of Form 100W.

Line 19, Line 20, and Line 21

The order in which line 19, line 20, and line 21 appear is not meant to imply the order in which any NOL deduction or disaster loss deduction is to be taken if more than one type of deduction is available.

Line 19 – Net operating loss (NOL) deduction

The NOL carryover deduction is suspended for the 2020, 2021, and 2022 taxable years, if the corporation’s taxable income is $1,000,000 or more. The corporation may continue to compute and carryover an NOL during the suspension period. See General Information Section W, Net Operating Loss (NOL), for more information.

For taxable years beginning on or after January 1, 2019, NOL carrybacks are not allowed.

The NOL carryover deduction is the amount of the NOL carryover from prior years that may be deducted from income in the current taxable year.

For more information, see form FTB 3805Q included in this booklet.

If line 18 is a positive amount, enter the NOL deduction carryover from the 2021 form FTB 3805Q, Part III, line 3 on Form 100W, line 19. The loss may not reduce current year income below zero. Any excess loss must be carried forward. Attach a copy of the 2021 form FTB 3805Q to Form 100W.

If the full amount of the NOL carryover may not be deducted this year, complete and attach a 2021 form FTB 3805Q showing the computation of the NOL carryover to future years.

If line 18 is a negative amount, or $1,000,000 or more, corporations may not claim an NOL deduction carryover. Enter -0- on line 19. See the 2021 form FTB 3805Q instructions to compute the NOL carryover to future years.

If the corporation terminates its election to be taxed as an S corporation, thus becoming a C corporation, then only that portion of the prior NOL carryover incurred while it had C corporation status may be used to the extent it has not expired.

Line 20 – EZ, TTA, or LAMBRA NOL carryover deduction

NOL carryover deductions for the Enterprise Zone (EZ), Targeted Tax Area (TTA), or Local Agency Military Base Recovery Area (LAMBRA). NOLs are suspended for the 2020, 2021, and 2022 taxable years, if the corporation's taxable income is $1,000,000 or more. For more information get form FTB 3805Z, form FTB 3807, or form FTB 3809.

An NOL generated by a business that operates (operated) or invests (invested) within a former EZ, TTA, or LAMBRA receives special tax treatment. The loss may not reduce the corporation’s current taxable year income below zero.

Corporations can no longer generate/incur any EZ or LAMBRA NOL for taxable years beginning on or after January 1, 2014. Corporations can claim EZ or LAMBRA NOL carryover deduction from prior years. Get FTB 3805Z Booklet or FTB 3807 Booklet for more information.

Corporations can no longer generate/incur any TTA NOL for taxable years beginning on or after January 1, 2013. Corporations can claim TTA NOL carryover deduction from prior years. Get FTB 3809 Booklet for more information.

Compute and enter the EZ, TTA, or LAMBRA NOL carryover deduction from the corporation’s form FTB 3805Z; form FTB 3809; or form FTB 3807, on Form 100W, line 20. Attach a copy of the applicable form to the Form 100W.

Line 21 – Disaster loss deduction

The disaster loss deduction is not subject to the NOL suspension rules for the 2020, 2021, and 2022 taxable years.

If the corporation has a disaster loss carryover deduction, and there is income in the current taxable year, enter the total amount from the 2021 form FTB 3805Q, Part III, line 2. The loss may not reduce the current taxable year income below zero. Any excess loss must be carried forward.

If the corporation deducts a 2021 disaster loss, any remaining disaster loss incurred in 2021 (NOL attributable a qualified disaster loss) must be carried forward. Get form FTB 3805Q for more information.

Line 23 – Tax

Use rates listed in General Information B, Tax Rates, and C, Minimum Franchise Tax.

Line 24 through Line 26 – Tax credits

For taxable years beginning on or after January 1, 2020, and before January 1, 2023, there is a $5,000,000 limitation on the application of credits. The total of all credits including the carryover of any credit for the taxable year may not reduce the “tax” by more than $5,000,000. For taxpayers included in a combined report, the limitation is applied at the group level.

Credits disallowed due to the limitation may be carried over. The carryover period for disallowed credits is extended by the number of taxable years the credit was not allowed. For more information, see R&TC Section 23036.3.

An eligible assignee can claim assigned credits, received this taxable year or carried over from prior years, against its tax liabilities. For more information, get form FTB 3544.

Note: The total amount of specific credit claimed on Form 100W or Schedule P (100W) should include both: (1) the total assigned credit claimed from form FTB 3544, Side 2, Part B, column (j), and (2) the amount of credit claimed that was generated by the assignee.

A variety of tax credits are available to California corporations to reduce tax. However, corporations may not reduce the tax (line 23) below the minimum franchise tax, if applicable.

Also, the amount of the credit that a corporation is allowed to claim may be limited. Complete Schedule P (100W), included in this booklet, to compute this limitation.

Corporations claiming the following credits are not subject to the tentative minimum tax limitation:

• California Competes Tax Credit
• California Motion Picture and Television Production Credit
• College Access Tax Credit
• Commercial Solar Electric System Credit carryover
• Commercial Solar Energy Credit carryover
• EZ Hiring Credit carryover
• EZ Sales or Use Tax Credit carryover
• Low-income Housing Credit
• Natural Heritage Preservation Tax Credit
• New California Motion Picture and Television Production Credit
• New Advanced Strategic Aircraft Credit
• Orphan Drug Credit carryover
• Program 3.0 California Motion Picture and Television Production Credit
• Research Credit
• Solar Energy Credit carryover
• TTA Hiring Credit Carryover
• TTA Sales or Use Tax Credit carryover

Each credit is identified by a code. See the Credit Chart. To claim one or two credits, enter the credit name, code, and the amount of the credit on line 24 and line 25. To claim more than two credits, use Schedule P (100W). List two of the credits on line 24 and line 25. Enter the total of any remaining credits from Schedule P (100W) on line 26. Do not make an entry on line 26 unless line 24 and line 25 are complete.

To figure tax credits, use the appropriate form or schedule. If the corporation claims a credit carryover for an expired credit, use form FTB 3540, Credit Carryover and Recapture Summary, to figure the amount of credit, unless the corporation is required to complete Schedule P (100W). In that case, enter the amount of the credit on Schedule P (100W) and complete Schedule P (100W). Do not attach form FTB 3540. For EZ, LAMBRA, Manufacturing Enhancement Area (MEA), or TTA credit carryovers, get form FTB 3805Z, form FTB 3807, form FTB 3808, or form FTB 3809.

Attach the credit form or schedule and Schedule P (100W), if applicable, to Form 100W.

Line 28 – Balance

Subtract line 27 from line 23. Enter the result or the applicable minimum franchise tax, whichever is more. See General Information C, Minimum Franchise Tax.

Line 29 – Alternative minimum tax

Enter on this line the AMT from Schedule P (100W), Part I, line 19, or Part II, line 18, whichever is applicable.

Line 32 – 2021 Estimated tax payments

Enter the total amount of estimated tax payments made during the 2021 taxable year on this line. If the corporation is a nonconsenting nonresident (NCNR) member of an LLC and tax was paid on the corporation’s behalf by the LLC, include the NCNR members’ tax from Schedule K-1 (568), Member’s Share of Income, Deductions, Credits, etc., line 15e. If the corporation is including NCNR tax, write “LLC” on the dotted line to the left of the amount on line 32, and attach Schedule K-1 (568) to the California income tax return to claim the tax paid by the LLC on the corporation’s behalf.

Line 33 – 2021 Withholding (Form 592-B and/or 593)

Enter the 2021 resident and nonresident or real estate withholding credit from Form 592-B, Resident and Nonresident Withholding Tax Statement, and/or Form 593, Real Estate Withholding Statement. Attach a copy of the form(s) to the lower front of Form 100W, Side 1. Do not include NCNR member’s tax from Schedule K-1 (568), line 15e as withholding.

Line 36 and Line 37 – Tax due or overpayment

Revise the amount of tax due or overpayment, if applicable, by the amount on Side 4, Schedule J, line 6. See instructions for Schedule J.

Line 38 – Amount to be credited to 2022 estimated tax

If the corporation chooses to have the overpayment credited to next year’s estimated tax payment, the corporation cannot later request that the overpayment be applied to the prior year to offset any tax due.

Line 39 – Refund

Direct Deposit of Refund (DDR)
Direct deposit is fast, safe, and convenient. To have the refund directly deposited into the corporation’s bank account, enter the account information on Form 100W, Side 2, lines 39a, 39b, and 39c. Be sure to fill in all the information. Do not attach a voided check or deposit slip.

Caution: Check with the corporation’s financial institution to make sure the deposit will be accepted and to get the correct routing and account numbers. The FTB is not responsible for a lost refund due to incorrect account information.

To cancel the DDR, call the FTB at 916-845-0353. The FTB is not responsible when a financial institution rejects a direct deposit. If the FTB, the bank, or financial institution rejects the direct deposit due to an error in the routing number or account number, the FTB will issue a paper check.

Line 40 – Penalties and interest

Enter on line 40a the amount of any penalties and interest due. Complete and attach form FTB 5806 to the back of Form 100W (after all schedules and federal return), only if Exception B or Exception C of form FTB 5806 is used in computing or eliminating the penalty. Be sure to check the box on line 40b. For more information, see General Information M, Penalties, and N, Interest.

Schedules

Schedule A — Taxes Deducted

Enter the nature of the tax, the taxing authority, the total tax, and the amount of the tax that is not deductible for California purposes on Form 100W, Side 4, Schedule A.

If the corporation is using the California computation method to compute the net income, enter the difference of column (c) and column (d) on Schedule F, line 17.

Schedule D — California Capital Gains or Losses

California law does not conform to the federal reduced capital gains tax rates. California taxes capital gains at the same rate as other types of income. California does not allow a three-year carryback of capital losses.

Gross Income Exclusion for Bruce’s Beach – Effective September 30, 2021, California law allows an exclusion from gross income for the first time sale in the taxable year in which the land within Manhattan State Beach, known as “Peck’s Manhattan Beach Tract Block 5” and commonly referred to as “Bruce’s Beach” is sold, transferred, or encumbered. A recipient’s gross income does not include the following:

• Any sale, transfer, or encumbrance of Bruce’s Beach;
• Any gain, income, or proceeds received that is directly derived from the sale, transfer, or encumbrance of Bruce’s Beach.

Capital Assets

California does not conform to the exclusion of a patent, invention, model or design (whether or not patented), and a secret formula or process held by the taxpayer who created the property (and certain other taxpayers) from the definition of capital asset under IRC Section 1221.

Qualified Opportunity Zone Funds

California does not conform to the deferral and exclusion of capital gains reinvested or invested in qualified opportunity zone funds under IRC Sections 1400Z-1 and 1400Z-2. Enter the entire gain amount on line 1 or line 5, column (f).

If, for California purposes, gains from investment in qualified opportunity zone property had been included in income during previous taxable year, do not include the gain in the current year income.

Enter any unused capital loss carryover from 2020 Form 100W, Side 6, Schedule D, line 11 on 2021 Form 100W, Side 6, Schedule D, line 3.

For information regarding the application of the capital loss limitation and the capital loss carryover in a combined report, see Cal. Code Regs., tit. 18 section 25106.5-2 and FTB Pub. 1061.

Line 1 and Line 5

Report short-term or long-term capital gains (losses) from form FTB 3725 on Schedule D. Make sure to label on Schedule D, Part I, line 1 and/or Part II, line 5, under column (a) Kind of property and description: “FTB 3725.” Enter the amount of short-term or long-term capital gains (losses) from form FTB 3725 on Schedule D, Part I, line 1, column (f) and/or Part II, line 5, column (f). Attach a copy of form FTB 3725 to the Form 100W.

Report short-term or long-term capital gains from form FTB 3726 on Schedule D. Make sure to label on Schedule D, Part I, line 1 and/or Part II, line 5, under column (a) Kind of property and description: “DISA.” Enter the amount of short-term or long-term capital gains from form FTB 3726 on Schedule D, Part I, line 1, column (f) and/or Part II, line 5, column (f). Attach a copy of form FTB 3726 to the Form 100W.

Schedule F — Computation of Net Income

Note: Do not include IRC Section 965 and 951A amounts.

See General Information I, Net Income Computation, for information on net income computation methods.

Line 1a – Gross Receipts

“Gross receipts” means the gross amounts realized (the sum of money and the fair market value of other property or services received) on:

• The sale or exchange of property,
• The performance of services, or
• The use of property or capital (including rents, royalties, interest, and dividends) in a transaction that produces business income, in which the income, gain, or loss is recognized (or would be recognized if the transaction were in the United States) under the IRC.

Amounts realized on the sale or exchange of property shall not be reduced by the cost of goods sold or the basis of property sold. For a complete definition of “gross receipts,” refer to R&TC Section 25120(f).

Line 4 - Total dividends

Enter the total amount of dividends received.

Line 13 – Salaries and wages

Gain from the exercise of California Qualified Stock Options issued and exercised on or after January 1, 1997, and before January 1, 2002, can be excluded from gross income if the individual’s earned income is $40,000 or less. The exclusion from gross income is subject to AMT and the corporation is not allowed a deduction for the compensation excluded from the employee’s gross income. For more information, see R&TC Section 24602.

Line 17 – Taxes

If the corporation is using the California computation method to compute the net income, enter on line 17 the difference of column (c) and column (d) of Schedule A.

Line 27 – Other deductions

Do not include the dividend deduction on this line. Instead enter the dividend deduction on Form 100W, Side 2, line 10, line 11a or line 11b.

Schedule G — Bad Debts Reserve Method

Only banks that are not a large bank, as defined under IRC Section 585(c)(2), may use the bad debt reserve method. For the purpose of the bad debt reserve method, banks include savings and loan associations, and other financial institutions. For more information, see IRC Sections 581 and 585. Complete Schedule G below and attach it to Form 100W.

Schedule J — Add-On Taxes and Recapture of Tax Credits

Complete Schedule J on Form 100W, Side 4, if the corporation has credit amounts to recapture or is required to include installment payments of “add-on” taxes for the following:

• Last-in, first-out (LIFO) recapture resulting from an S corporation election.
• Interest computed under the look-back method for completed long-term contracts.
• Interest on tax attributable to installment sales of certain property or use of the installment method for non-dealer installment obligations.
• IRC Section 197(f)(9)(B)(ii) election to recognize gain on the disposition of an IRC Section 197 intangible.

Revise the amount of tax due or overpayment on Form 100W, Side 2, line 36 or line 37, as applicable by the amount from Schedule J, line 6.

Installment Payment of Tax Attributable to LIFO Recapture for Corporations Making an S Corporation Election. A corporation that uses the LIFO inventory pricing method and makes an S corporation election must include a “LIFO recapture amount” in income for its last year as a C corporation. The corporation’s LIFO recapture amount is equal to the excess of the inventory amount using the first-in, first-out (FIFO) method, over the inventory amount using the LIFO method, at the close of the corporation’s last taxable year as a C corporation.

The additional tax resulting from inclusion of the LIFO recapture in income is payable in four equal installments. The first installment is due on the original due date of Form 100W of the electing corporation’s last year as a C corporation.

To determine the additional tax due to LIFO recapture, the corporation must complete Form 100W, Side 2, line 18 through line 30, based on income that does not include the LIFO recapture amount.

On a separate worksheet using the Form 100W format, the corporation must complete the equivalent of Form 100W, Side 2, line 18 through line 30, based on taxable income including the LIFO recapture amount. Form 100W, Side 2, line 30, must then be compared to line 30 of the worksheet. The difference is the additional tax due to LIFO recapture.

Since Form 100W, Side 2, line 30, does not include the additional tax due to LIFO recapture, the corporations must include 1/4 of the additional tax on Schedule J, line 1, and adjust line 36 or line 37 accordingly. Attach the worksheet showing the computation.

The electing S corporations must pay the remaining three installments of deferred tax with Form 100S.

Long-term Contracts. If the corporation must compute interest under the look-back method for completed long-term contracts, complete and attach form FTB 3834, Interest Computation Under the Look-Back Method for Completed Long-Term Contracts. Include the amount of interest the corporation owes or the amount of interest to be credited or refunded to the corporation on Schedule J, line 2. If interest is to be credited or refunded, enter as a negative amount. Attach form FTB 3834 to Form 100W.

Interest on Tax Attributable to Payments Received on Installment Sales of Certain Timeshares and Residential Lots. If the corporation elected to pay interest on the amount of tax attributable to payments received on installment obligations arising from the disposition of certain timeshares and residential lots under IRC Section 453(l)(3), it must include the interest due on Schedule J, line 3a. For the applicable interest rates, get FTB Pub. 1138. Attach a schedule showing the computation.

Interest on Tax Deferred Under the Installment Method for Certain Nondealer Installment Obligations. If an obligation arising from the disposition of property to which IRC Section 453A(c) applies is outstanding at the close of the taxable year, the corporation must include the interest due under IRC Section 453A on Schedule J, line 3b. For the applicable interest rates, get FTB Pub. 1138.

IRC Section 197(f)(9)(B)(ii) Election. Complete Schedule J, line 4 if the corporation elected to pay tax on the gain from the sale of an intangible under the related person exception to the anti-churning rules.

Credit Recapture. Complete Schedule J, line 5, if the corporation completed the credit recapture portion for any of the following forms:

• FTB 3531, California Competes Tax Credit - Enter only the recaptured amount used. Get the instructions for form FTB 3531, Part III, Credit Recapture, for more information.
• FTB 3554, New Employment Credit

Also, complete Schedule J, line 5, if the corporation is subject to recapture for any of the following credits:

• Community Development Financial Institutions Investment Credit
• Environmental Tax Credit
• Farmworker Housing Credit

Get the instructions for form FTB 3540, Part II, for more information.

Schedule M-1 — Reconciliation of Income (Loss) per Books With Income (Loss) per Return

Schedule M-1 is used to reconcile the difference between book and tax accounting for an income or expense item. The federal and state Schedule M-1 may be the same when the corporation uses the federal reconciliation method for net income computation. See General Information I, Net Income Computation, for more information. The California Schedule M-1 will be different from the federal Form 1120, Schedule M-1, if using the California computation method for net income. The California computation method is generally used when the corporation has no federal filing requirement, or if the corporation maintains separate records for state purposes.

Reporting Requirements. If the corporation’s total receipts (see definition of total receipts) for the taxable year and total assets at the end of the taxable year are less than $250,000, the corporation is not required to complete Schedule L, Schedule M-1, and Schedule M-2. However, this information must be available in the future upon request.

Corporation With Total Assets of At Least $10 Million but Less Than $50 Million. The IRS allows corporations with at least $10 million but less than $50 million in total assets at tax year end to file Schedule M-1 (Form 1120/1120-F) in place of Schedule M-3 (Form 1120/1120-F), Parts II and III. However, Schedule M-3 (Form 1120/1120-F), Part I, is required for these corporations.

For California purposes, the corporation must complete the California Schedule M-1, and attach either of the following:

• A copy of the federal Schedule M-3 (Form 1120/1120-F) and related attachments to the Form 100W.
• A complete copy of the federal return.

The FTB will accept the federal Schedule M-3 (Form 1120/1120-F) in a spreadsheet format if more convenient.

Credit Chart

Repealed Credits with Carryover or Recapture Provisions:

The expiration dates for the credits listed below have passed. However, these credits had carryover or recapture provisions. The corporation may claim these credits if there is a carryover available from prior years. If the corporation is not required to complete Schedule P (100), get form FTB 3540, Credit Carryover and Recapture Summary, to figure the credit carryover to future years.

For EZ, LAMBRA, MEA, or TTA credit carryovers, get form FTB 3805Z, form FTB 3807, form FTB 3808, or form FTB 3809.

• Agricultural Products: 175
• Commercial Solar Electric System: 196
• Commercial Solar Energy: 181
• Community Development Financial Institutions Investment: 209
• Contribution of Computer Software: 202
• Donated Fresh Fruits or Vegetables: 224
• Employer Childcare Contribution: 190
• Employer Childcare Program: 189
• Employer Ridesharing – Large employer: 191
• Employer Ridesharing – Small employer: 192
• Employer Ridesharing – Transit passes: 193
• Energy Conservation: 182
• Enterprise Zone Hiring: 176
• Enterprise Zone Sales or Use Tax: 176
• Environmental Tax: 218
• Farmworker Housing – Construction: 207
• Local Agency Military Base Recovery Area Hiring: 198
• Local Agency Military Base Recovery Area Sales or Use Tax: 198
• Low-Emission Vehicles: 160
• Manufacturing Enhancement Area Hiring: 211
• New Jobs: 220
• Orphan Drug: 185
• Recycling Equipment: 174
• Ridesharing: 171
• Salmon & Steelhead Trout Habitat Restoration: 200
• Solar Energy: 180
• Solar Pump: 179
• Targeted Tax Area Hiring : 210
• Targeted Tax Area Sales or Use Tax : 210
• Technology Property Contributions: 201

Principal Business Activity Codes

This list of principal business activities and their associated codes is designed to classify a business by the type of activity in which it is engaged to facilitate the administration of the California Revenue and Taxation Code. These principal business activity codes are based on the North American Industry Classification System.

Using the list of activities and codes below, determine from which activity the company derives the largest percentage of its "total receipts." Total receipts is defined as the sum of gross receipts or sales (Form 100W, Side 4, Schedule F, line 1a) plus all other income (Form 100W, Side 4, Schedule F, lines 4 through 10). If the company purchases raw materials and supplies them to a subcontractor to produce the finished product, but retains title to the product, the company is considered a manufacturer and must use one of the manufacturing codes (311110-339900).

Once the principal business activity is determined, entries must be made on Form 100W, Question F. For the business activity code, enter the six-digit code selected from the list below. On the next line enter a brief description of the company’s business activity. Finally, enter a description of the principal product or service of the company on the next line.

Agriculture, Forestry, Fishing, and Hunting

Crop Production

Code

 

111100

Oilseed & Grain Farming

111210

Vegetable & Melon Farming (including potatoes & yams)

111300

Fruit & Tree Nut Farming

111400

Greenhouse, Nursery, & Floriculture Production

111900

Other Crop Farming (including tobacco, cotton, sugarcane, hay, peanut, sugar beet, & all other crop farming)

Animal Production

112111

Beef Cattle Ranching & Farming

112112

Cattle Feedlots

112120

Dairy Cattle & Milk Production

112210

Hog & Pig Farming

112300

Poultry & Egg Production

112400

Sheep & Goat Farming

112510

Aquaculture (including shellfish & finfish farms & hatcheries)

112900

Other Animal Production

Forestry and Logging

113110

Timber Tract Operations

113210

Forest Nurseries & Gathering of Forest Products

113310

Logging

Fishing, Hunting and Trapping

114110

Fishing

114210

Hunting & Trapping

Support Activities for Agriculture and Forestry

115110

Support Activities for Crop Production (including cotton ginning, soil preparation, planting, & cultivating)

115210

Support Activities for Animal Production

115310

Support Activities for Forestry

Mining

211120

Crude Petroleum Extraction

211130

Natural Gas Extraction

212110

Coal Mining

212200

Metal Ore Mining

212310

Stone Mining & Quarrying

212320

Sand, Gravel, Clay, & Ceramic & Refractory Mineral Mining & Quarrying

212390

Other Nonmetallic Mineral Mining & Quarrying

213110

Support Activities for Mining

Utilities

221100

Electric Power Generation, Transmission & Distribution

221210

Natural Gas Distribution

221300

Water, Sewage, & Other Systems

221500

Combination Gas and Electric

Construction

Construction of Buildings

236110

Residential Building Construction

236200

Nonresidential Building Construction

Heavy and Civil Engineering Construction

237100

Utility System Construction

237210

Land Subdivision

237310

Highway, Street, & Bridge Construction

237990

Other Heavy & Civil Engineering Construction

Specialty Trade Contractors

238100

Foundation, Structure, & Building Exterior Contractors (including framing carpentry, masonry, glass, roofing, & siding)

238210

Electrical Contractors

238220

Plumbing, Heating, & Air-Conditioning Contractors

238290

Other Building Equipment Contractors

238300

Building Finishing Contractors (including drywall, insulation, painting, wallcovering, flooring, tile, & finish carpentry)

238900

Other Specialty Trade Contractors (including site preparation)

Manufacturing

Food Manufacturing

311110

Animal Food Mfg

311200

Grain & Oilseed Milling

311300

Sugar & Confectionery Product Mfg

311400

Fruit & Vegetable Preserving & Specialty Food Mfg

311500

Dairy Product Mfg

311610

Animal Slaughtering and Processing

311710

Seafood Product Preparation & Packaging

311800

Bakeries, Tortilla & Dry Pasta Mfg

311900

Other Food Mfg (including coffee, tea, flavorings, & seasonings)

Beverage and Tobacco Product Manufacturing

312110

Soft Drink & Ice Mfg

312120

Breweries

312130

Wineries

312140

Distilleries

312200

Tobacco Manufacturing

Textile Mills and Textile Product Mills

313000

Textile Mills

314000

Textile Product Mills

Apparel Manufacturing

315100

Apparel Knitting Mills

315210

Cut & Sew Apparel Contractors

315220

Men’s & Boys’ Cut & Sew Apparel Mfg

315240

Women’s, Girls’ and Infants’ Cut and Sew Apparel Mfg

315280

Other Cut & Sew Apparel Mfg

315990

Apparel Accessories & Other Apparel Mfg

Leather and Allied Product Manufacturing

316110

Leather & Hide Tanning & Finishing

316210

Footwear Mfg (including rubber & plastics)

316990

Other Leather & Allied Product Mfg

Wood Product Manufacturing

321110

Sawmills & Wood Preservation

321210

Veneer, Plywood, & Engineered Wood Product Mfg

321900

Other Wood Product Mfg

Paper Manufacturing

322100

Pulp, Paper, & Paperboard Mills

322200

Converted Paper Product Mfg

Printing and Related Support Activities

323100

Printing & Related Support Activities

Petroleum and Coal Products Manufacturing

324110

Petroleum Refineries (including integrated)

324120

Asphalt Paving, Roofing, & Saturated Materials Mfg

324190

Other Petroleum & Coal Products Mfg

Chemical Manufacturing

325100

Basic Chemical Mfg

325200

Resin, Synthetic Rubber, & Artificial & Synthetic Fibers & Filaments Mfg

325300

Pesticide, Fertilizer, & Other Agricultural Chemical Mfg

325410

Pharmaceutical & Medicine Mfg

325500

Paint, Coating, & Adhesive Mfg

325600

Soap, Cleaning Compound, & Toilet Preparation Mfg

325900

Other Chemical Product & Preparation Mfg

Plastics and Rubber Products Manufacturing

326100

Plastics Product Mfg

326200

Rubber Product Mfg

Nonmetallic Mineral Product Manufacturing

327100

Clay Product & Refractory Mfg

327210

Glass & Glass Product Mfg

327300

Cement & Concrete Product Mfg

327400

Lime & Gypsum Product Mfg

327900

Other Nonmetallic Mineral Product Mfg

Primary Metal Manufacturing

331110

Iron & Steel Mills & Ferroalloy Mfg

331200

Steel Product Mfg from Purchased Steel

331310

Alumina & Aluminum Production & Processing

331400

Nonferrous Metal (except Aluminum) Production & Processing

331500

Foundries

Fabricated Metal Product Manufacturing

332110

Forging & Stamping

332210

Cutlery & Handtool Mfg

332300

Architectural & Structural Metals Mfg

332400

Boiler, Tank, & Shipping Container Mfg

332510

Hardware Mfg

332610

Spring & Wire Product Mfg

332700

Machine Shops; Turned Product; & Screw, Nut, & Bolt Mfg

332810

Coating, Engraving, Heat Treating, & Allied Activities

332900

Other Fabricated Metal Product Mfg

Machinery Manufacturing

333100

Agriculture, Construction, & Mining Machinery Mfg

333200

Industrial Machinery Mfg

333310

Commercial & Service Industry Machinery Mfg

333410

Ventilation, Heating, Air-Conditioning, & Commercial Refrigeration Equipment Mfg

333510

Metalworking Machinery Mfg

333610

Engine, Turbine, & Power Transmission Equipment Mfg

333900

Other General Purpose Machinery Mfg

Computer and Electronic Product Manufacturing

334110

Computer & Peripheral Equipment Mfg

334200

Communications Equipment Mfg

334310

Audio & Video Equipment Mfg

334410

Semiconductor & Other Electronic Component Mfg

334500

Navigational, Measuring, Electromedical, & Control Instruments Mfg

334610

Manufacturing & Reproducing Magnetic & Optical Media

Electrical Equipment, Appliance, and Component Manufacturing

335100

Electric Lighting Equipment Mfg

335200

Major Household Appliance Mfg

335310

Electrical Equipment Mfg

335900

Other Electrical Equipment & Component Mfg

Transportation Equipment Manufacturing

336100

Motor Vehicle Mfg

336210

Motor Vehicle Body & Trailer Mfg

336300

Motor Vehicle Parts Mfg

336410

Aerospace Product & Parts Mfg

336510

Railroad Rolling Stock Mfg

336610

Ship & Boat Building

336990

Other Transportation Equipment Mfg

Furniture and Related Product Manufacturing

337000

Furniture & Related Product Manufacturing

Miscellaneous Manufacturing

339110

Medical Equipment & Supplies Mfg

339900

Other Miscellaneous Manufacturing

Wholesale Trade

Merchant Wholesalers, Durable Goods

423100

Motor Vehicle & Motor Vehicle Parts & Supplies

423200

Furniture & Home Furnishings

423300

Lumber & Other Construction Materials

423400

Professional & Commercial Equipment & Supplies

423500

Metal & Mineral (except Petroleum)

423600

Household Appliances and Electrical and Electronic Goods

423700

Hardware, & Plumbing & Heating Equipment & Supplies

423800

Machinery, Equipment, & Supplies

423910

Sporting & Recreational Goods & Supplies

423920

Toy & Hobby Goods & Supplies

423930

Recyclable Materials

423940

Jewelry, Watch, Precious Stone, & Precious Metals

423990

Other Miscellaneous Durable Goods

Merchant Wholesalers, Nondurable Goods

424100

Paper & Paper Products

424210

Drugs & Druggists’ Sundries

424300

Apparel, Piece Goods, & Notions

424400

Grocery & Related Products

424500

Farm Product Raw Materials

424600

Chemical & Allied Products

424700

Petroleum & Petroleum Products

424800

Beer, Wine, & Distilled Alcoholic Beverages

424910

Farm Supplies

424920

Book, Periodical, & Newspapers

424930

Flower, Nursery Stock, & Florists’ Supplies

424940

Tobacco & Tobacco Products

424950

Paint, Varnish, & Supplies

424990

Other Miscellaneous Nondurable Goods

Wholesale Electronic Markets and Agents and Brokers

425110

Business to Business Electronic Markets

425120

Wholesale Trade Agents & Brokers

Retail Trade

Motor Vehicle and Parts Dealers

441110

New Car Dealers

441120

Used Car Dealers

441210

Recreational Vehicle Dealers

441222

Boat Dealers

441228

Motorcycle, ATV, and All Other Motor Vehicle Dealers

441300

Automotive Parts, Accessories, & Tire Stores

Furniture and Home Furnishings Stores

442110

Furniture Stores

442210

Floor Covering Stores

442291

Window Treatment Stores

442299

All Other Home Furnishings Stores

Electronics and Appliance Stores

443141

Household Appliance Stores

443142

Electronics Stores (including Audio, Video, Computer, and Camera Stores)

Building Material and Garden Equipment and Supplies Dealers

444110

Home Centers

444120

Paint & Wallpaper Stores

444130

Hardware Stores

444190

Other Building Material Dealers

444200

Lawn & Garden Equipment & Supplies Stores

Food and Beverage Stores

445110

Supermarkets and Other Grocery (except Convenience) Stores

445120

Convenience Stores

445210

Meat Markets

445220

Fish & Seafood Markets

445230

Fruit & Vegetable Markets

445291

Baked Goods Stores

445292

Confectionery & Nut Stores

445299

All Other Specialty Food Stores

445310

Beer, Wine, & Liquor Stores

Health and Personal Care Stores

446110

Pharmacies & Drug Stores

446120

Cosmetics, Beauty Supplies, & Perfume Stores

446130

Optical Goods Stores

446190

Other Health & Personal Care Stores

Gasoline Stations

447100

Gasoline Stations (including convenience stores with gas)

Clothing and Clothing Accessories Stores

448110

Men’s Clothing Stores

448120

Women’s Clothing Stores

448130

Children’s & Infants’ Clothing Stores

448140

Family Clothing Stores

448150

Clothing Accessories Stores

448190

Other Clothing Stores

448210

Shoe Stores

448310

Jewelry Stores

448320

Luggage & Leather Goods Stores

Sporting Goods, Hobby, Book, and Music Stores

451110

Sporting Goods Stores

451120

Hobby, Toy, & Game Stores

451130

Sewing, Needlework, & Piece Goods Stores

451140

Musical Instrument & Supplies Stores

451211

Book Stores

451212

News Dealers & Newsstands

General Merchandise Stores

452200

Department Stores

452300

General Merchandise Stores, incl. Warehouse Clubs and Supercenters

Miscellaneous Store Retailers

453110

Florists

453210

Office Supplies & Stationery Stores

453220

Gift, Novelty, & Souvenir Stores

453310

Used Merchandise Stores

453910

Pet & Pet Supplies Stores

453920

Art Dealers

453930

Manufactured (Mobile) Home Dealers

453990

All Other Miscellaneous Store Retailers (including tobacco, candle, & trophy shops)

Nonstore Retailers

454110

Electronic Shopping & Mail-Order Houses

454210

Vending Machine Operators

454310

Fuel Dealers (including Heating Oil and Liquefied Petroleum)

454390

Other Direct Selling Establishments (including door-to-door retailing, frozen food plan providers, party plan merchandisers, & coffee-break service providers)

Transportation and Warehousing

Air, Rail, and Water Transportation

481000

Air Transportation

482110

Rail Transportation

483000

Water Transportation

Truck Transportation

484110

General Freight Trucking, Local

484120

General Freight Trucking, Long-distance

484200

Specialized Freight Trucking

Transit and Ground Passenger Transportation

485110

Urban Transit Systems

485210

Interurban & Rural Bus Transportation

485310

Taxi & Ridesharing Services

485320

Limousine Service

485410

School & Employee Bus Transportation

485510

Charter Bus Industry

485990

Other Transit & Ground Passenger Transportation

Pipeline Transportation

486000

Pipeline Transportation

Scenic & Sightseeing Transportation

487000

Scenic & Sightseeing Transportation

Support Activities for Transportation

488100

Support Activities for Air Transportation

488210

Support Activities for Rail Transportation

488300

Support Activities for Water Transportation

488410

Motor Vehicle Towing

488490

Other Support Activities for Road Transportation

488510

Freight Transportation Arrangement

488990

Other Support Activities for Transportation

Couriers and Messengers

492110

Couriers

492210

Local Messengers & Local Delivery

Warehousing and Storage

493100

Warehousing & Storage (except lessors of miniwarehouses & self-storage units)

Information

Publishing Industries (except Internet)

511110

Newspaper Publishers

511120

Periodical Publishers

511130

Book Publishers

511140

Directory & Mailing List Publishers

511190

Other Publishers

511210

Software Publishers

Motion Picture and Sound Recording Industries

512100

Motion Picture & Video Industries (except video rental)

512200

Sound Recording Industries

Broadcasting (except Internet)

515100

Radio & Television Broadcasting

515210

Cable & Other Subscription Programming

Telecommunications

517000

Telecommunications (including paging, cellular, satellite, cable & other program distribution, resellers, & other telecommunications & internet service providers)

Data Processing Services

518210

Data Processing, Hosting, & Related Services

Other Information Services

519100

Other Information Services (including news syndicates, libraries, internet publishing & broadcasting)

Finance and Insurance

Depository Credit Intermediation

522110

Commercial Banking

522120

Savings Institutions

522130

Credit Unions

522190

Other Depository Credit Intermediation

Nondepository Credit Intermediation

522210

Credit Card Issuing

522220

Sales Financing

522291

Consumer Lending

522292

Real Estate Credit (including mortgage bankers & originators)

522293

International Trade Financing

522294

Secondary Market Financing

522298

All Other Nondepository Credit Intermediation

Activities Related to Credit Intermediation

522300

Activities Related to Credit Intermediation (including loan brokers, check clearing, & money transmitting)

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

523110

Investment Banking & Securities Dealing

523120

Securities Brokerage

523130

Commodity Contracts Dealing

523140

Commodity Contracts Brokerage

523210

Securities & Commodity Exchanges

523900

Other Financial Investment Activities (including portfolio management & investment advice)

Insurance Carriers and Related Activities

524140

Direct Life, Health, & Medical Insurance & Reinsurance Carriers

524150

Direct Insurance & Reinsurance (except Life, Health, & Medical) Carriers

524210

Insurance Agencies & Brokerages

524290

Other Insurance Related Activities (including third-party administration of insurance and pension funds)

Funds, Trusts, and Other Financial Vehicles

525100

Insurance & Employee Benefit Funds

525910

Open-End Investment Funds (Form 1120-RIC)

525920

Trusts, Estates, & Agency Accounts

525990

Other Financial Vehicles (including mortgage REITs & closed-end investment funds)

“Offices of Bank Holding Companies” and “Offices of Other Holding Companies” are located under Management of Companies (Holding Companies).

Real Estate and Rental and Leasing

Real Estate

531110

Lessors of Residential Buildings & Dwellings (including equity REITs)

531120

Lessors of Nonresidential Buildings (except Miniwarehouses) (including equity REITs)

531130

Lessors of Miniwarehouses & Self-Storage Units (including equity REITs)

531190

Lessors of Other Real Estate Property (including equity REITs)

531210

Offices of Real Estate Agents & Brokers

531310

Real Estate Property Managers

531320

Offices of Real Estate Appraisers

531390

Other Activities Related to Real Estate

Rental and Leasing Services

532100

Automotive Equipment Rental & Leasing

532210

Consumer Electronics & Appliances Rental

532281

Formal Wear & Costume Rental

532282

Video Tape & Disc Rental

532283

Home Health Equipment Rental

532284

Recreational Goods Rental

532289

All Other Consumer Goods Rental

532310

General Rental Centers

532400

Commercial & Industrial Machinery & Equipment Rental & Leasing

Lessors of Nonfinancial Intangible Assets (except copyrighted works)

533110

Lessors of Nonfinancial Intangible Assets (except copyrighted works)

Professional, Scientific, and Technical Services

Legal Services

541110

Offices of Lawyers

541190

Other Legal Services

Accounting, Tax Preparation, Bookkeeping, and Payroll Services

541211

Offices of Certified Public Accountants

541213

Tax Preparation Services

541214

Payroll Services

541219

Other Accounting Services

Architectural, Engineering, and Related Services

541310

Architectural Services

541320

Landscape Architecture Services

541330

Engineering Services

541340

Drafting Services

541350

Building Inspection Services

541360

Geophysical Surveying & Mapping Services

541370

Surveying & Mapping (except Geophysical) Services

541380

Testing Laboratories

Specialized Design Services

541400

Specialized Design Services (including interior, industrial, graphic, & fashion design)

Computer Systems Design and Related Services

541511

Custom Computer Programming Services

541512

Computer Systems Design Services

541513

Computer Facilities Management Services

541519

Other Computer Related Services

Other Professional, Scientific, and Technical Services

541600

Management, Scientific, & Technical Consulting Services

541700

Scientific Research & Development Services

541800

Advertising & Related Services

541910

Marketing Research & Public Opinion Polling

541920

Photographic Services

541930

Translation & Interpretation Services

541940

Veterinary Services

541990

All Other Professional, Scientific, & Technical Services

Management of Companies (Holding Companies)

551111

Offices of Bank Holding Companies

551112

Offices of Other Holding Companies

Administrative and Support and Waste Management and Remediation Services

Administrative and Support Services

561110

Office Administrative Services

561210

Facilities Support Services

561300

Employment Services

561410

Document Preparation Services

561420

Telephone Call Centers

561430

Business Service Centers (including private mail centers & copy shops)

561440

Collection Agencies

561450

Credit Bureaus

561490

Other Business Support Services (including repossession services, court reporting, & stenotype services)

561500

Travel Arrangement & Reservation Services

561600

Investigation & Security Services

561710

Exterminating & Pest Control Services

561720

Janitorial Services

561730

Landscaping Services

561740

Carpet & Upholstery Cleaning Services

561790

Other Services to Buildings & Dwellings

561900

Other Support Services (including packaging & labeling services, & convention & trade show organizers)

Waste Management and Remediation Services

562000

Waste Management & Remediation Services

Educational Services

611000

Educational Services (including schools, colleges, & universities)

Health Care and Social Assistance

Offices of Physicians and Dentists

621111

Offices of Physicians (except mental health specialists)

621112

Offices of Physicians, Mental Health Specialists

621210

Offices of Dentists

Offices of Other Health Practitioners

621310

Offices of Chiropractors

621320

Offices of Optometrists

621330

Offices of Mental Health Practitioners (except Physicians)

621340

Offices of Physical, Occupational & Speech Therapists, & Audiologists

621391

Offices of Podiatrists

621399

Offices of All Other Miscellaneous Health Practitioners

Outpatient Care Centers

621410

Family Planning Centers

621420

Outpatient Mental Health & Substance Abuse Centers

621491

HMO Medical Centers

621492

Kidney Dialysis Centers

621493

Freestanding Ambulatory Surgical & Emergency Centers

621498

All Other Outpatient Care Centers

Medical and Diagnostic Laboratories

621510

Medical & Diagnostic Laboratories

Home Health Care Services

621610

Home Health Care Services

Other Ambulatory Health Care Services

621900

Other Ambulatory Health Care Services (including ambulance services & blood & organ banks)

Hospitals

622000

Hospitals

Nursing and Residential Care Facilities

623000

Nursing & Residential Care Facilities

Social Assistance

624100

Individual & Family Services

624200

Community Food & Housing, & Emergency & Other Relief Services

624310

Vocational Rehabilitation Services

624410

Child Day Care Services

Arts, Entertainment, and Recreation

Performing Arts, Spectator Sports, and Related Industries

711100

Performing Arts Companies

711210

Spectator Sports (including sports clubs & racetracks)

711300

Promoters of Performing Arts, Sports, & Similar Events

711410

Agents & Managers for Artists, Athletes, Entertainers, & Other Public Figures

711510

Independent Artists, Writers, & Performers

Museums, Historical Sites, and Similar Institutions

712100

Museums, Historical Sites, & Similar Institutions

Amusement, Gambling, and Recreation Industries

713100

Amusement Parks & Arcades

713200

Gambling Industries

713900

Other Amusement & Recreation Industries (including golf courses, skiing facilities, marinas, fitness centers, & bowling centers)

Accommodation and Food Services

Accommodation

721110

Hotels (except Casino Hotels) & Motels

721120

Casino Hotels

721191

Bed & Breakfast Inns

721199

All Other Traveler Accommodation

721210

RV (Recreational Vehicle) Parks & Recreational Camps

721310

Rooming & Boarding Houses Dormitories, & Workers’ Camps

Food Services and Drinking Places

722300

Special Food Services (including food service contractors & caterers)

722410

Drinking Places (Alcoholic Beverages)

722511

Full Service Restaurants

722513

Limited Service Restaurants

722514

Cafeterias and Buffets

722515

Snack and Non-alcoholic Beverage Bars

Other Services

Repair and Maintenance

811110

Automotive Mechanical & Electrical Repair & Maintenance

811120

Automotive Body, Paint, Interior, & Glass Repair

811190

Other Automotive Repair & Maintenance (including oil change & lubrication shops & car washes)

811210

Electronic & Precision Equipment Repair & Maintenance

811310

Commercial & Industrial Machinery & Equipment (except Automotive & Electronic) Repair & Maintenance

811410

Home & Garden Equipment & Appliance Repair & Maintenance

811420

Reupholstery & Furniture Repair

811430

Footwear & Leather Goods Repair

811490

Other Personal & Household Goods Repair & Maintenance

Personal and Laundry Services

812111

Barber Shops

812112

Beauty Salons

812113

Nail Salons

812190

Other Personal Care Services (including diet & weight reducing centers)

812210

Funeral Homes & Funeral Services

812220

Cemeteries & Crematories

812310

Coin-Operated Laundries & Drycleaners

812320

Drycleaning & Laundry Services (except Coin-Operated)

812330

Linen & Uniform Supply

812910

Pet Care (except Veterinary) Services

812920

Photofinishing

812930

Parking Lots & Garages

812990

All Other Personal Services

Religious, Grantmaking, Civic, Professional, and Similar Organizations

813000

Religious, Grantmaking, Civic, Professional, & Similar Organizations (including condominium and homeowners associations)

How To Get California Tax Information

Where To Get Tax Forms and Publications

By Internet

You can download, view, and print California tax forms, instructions, publications, FTB Notices, and FTB Legal Rulings at ftb.ca.gov.

By phone

You can order current year California tax forms from 6 a.m. to 10 p.m. weekdays, 6 a.m. to 4:30 p.m. Saturdays, except holidays. Refer to the list in the right column and find the code for the form you want to order. Call 800-338-0505 and follow the recorded instructions.

Allow two weeks to receive your order. If you live outside California, allow three weeks to receive your order.

By mail

Write to:

Tax Forms Request Unit MS D120
Franchise Tax Board
PO Box 307
Rancho Cordova, CA 95741-0307

Letters

If you write to us, be sure to include your California corporation number or federal employer identification number, your daytime and evening telephone numbers, and a copy of the notice with your letter. Send your letter to:

Mail

Franchise Tax Board
PO Box 942857
Sacamento, CA 95741-0307

We will respond to your letter within ten weeks. In some cases, we may need to call you for additional information. Do not attach correspondence to your tax return unless the correspondence relates to an item on the return.

General Phone Service

Telephone assistance is available year-round from 7 a.m. until 5 p.m. Monday through Friday, except holidays. Hours subject to change.

Telephone:

800-852-5711 from within the United States
916-845-6500 from outside the United States

California Relay Service:

711 or 800-735-2929 for persons with hearing or speaking limitations

IRS:

800-829-4933 call the IRS for federal tax questions

Asistencia En Español

Asistencia telefónica está disponible durante todo el año desde las 7 a.m. hasta las 5 p.m. de lunes a viernes, excepto días feriados. Las horas están sujetas a cambios.

Teléfono:

800-852-5711 dentro de los Estados Unidos
916-845-6500 fuera de los Estados Unidos

Servicio de Retransmisión de California:

711 o 800-735-2929 para personas con limitaciones auditivas o del habla

IRS:

800-829-4933 para preguntas sobre impuestos federales

California Tax Forms and Publications

817

California Corporation Tax Forms and Instructions.
This booklet contains:

• Form 100, California Corporation Franchise or Income Tax Return
• Schedule H (100), Dividend Income Deduction
• Schedule P (100), Alternative Minimum Tax and Credit Limitations — Corporations
• FTB 3539, Payment for Automatic Extension for Corporations and Exempt Organizations
• FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations — Corporations
• FTB 3885, Corporation Depreciation and Amortization

816

California S Corporation Tax Forms and Instructions.
This booklet contains:

• Form 100S, California S Corporation Franchise or Income Tax Return
• Schedule B (100S), S Corporation Depreciation and Amortization
• Schedule C (100S), S Corporation Tax Credits
• Schedule D (100S), S Corporation Capital Gains and Losses and Built-In Gains
• Schedule H (100S), S Corporation Dividend Income Deduction
• Schedule K-1 (100S), Shareholder’s Share of Income, Deductions, Credits, etc.
• Schedule QS, Qualified Subchapter S Subsidiary (QSub) Information
• FTB 3539, Payment for Automatic Extension for Corporations and Exempt Organizations
• FTB 3805Q, Net Operating Loss (NOL) Computation and NOL and Disaster Loss Limitations – Corporations

814

Form 109, Exempt Organization Business Income Tax Booklet

818

Form 100-ES, Corporation Estimated Tax

815

Form 199, California Exempt Organization Annual Information Return and Instructions

802

FTB 3500, Exemption Application

831

FTB 3500A, Submission of Exemption Request

943

FTB 4058, California Taxpayers’ Bill of Rights

948

FTB 1131 EN-SP, Franchise Tax Board Privacy Notice on Collection

Your Rights As A Taxpayer

The FTB’s goals include making certain that your rights are protected so that you have the highest confidence in the integrity, efficiency, and fairness of our state tax system. For more information get FTB 4058, California Taxpayers’ Bill of Rights.

See “Where To Get Tax Forms and Publications.”

Franchise Tax Board Privacy Notice on Collection

Our privacy notice can be found in annual tax booklets or online. Go to ftb.ca.gov/privacy to learn about our privacy policy statement, or go to ftb.ca.gov/forms and search for 1131 to locate FTB 1131 EN-SP, Franchise Tax Board Privacy Notice on Collection. To request this notice by mail, call 800-338-0505 and enter form code 948 when instructed.

Automated Phone Service

(Keep This Information For Future Use)

Use our automated phone service to get recorded answers to many of your questions about California taxes and to order current year California business entity tax forms and publications. This service is available in English and Spanish to callers with touch-tone telephones. Have paper and pencil ready to take notes.

Telephone:

800-338-0505 from within the United States
916-845-6500 from outside the United States

To Order Forms

See “Where to Get Tax Forms and Publications.”

To Get Information

You can hear recorded answers to Frequently Asked Questions 24 hours a day, 7 days a week. Call our automated phone service at the number listed above. Select “Business Entity Information,” then select “Frequently Asked Questions.” Enter the 3-digit code, listed below, when prompted.

Code

Filing Assistance

715

If my actual tax is less than the minimum franchise tax, what figure do I put on the Tax line on Form 100 or Form 100W?

717

What are the tax rates for corporations?

718

How do I get an extension of time to file?

722

When does my corporation have to file a short-period return?

734

Is my corporation subject to franchise tax or income tax?

 

S Corporations

704

Is an S corporation subject to the minimum franchise tax?

705

Are S corporations required to make estimated payments?

706

What forms do S corporations file?

707

The tax for my S corporation is less than the minimum franchise tax. What figure do I put on the Tax line on Form 100S?

 

Exempt Organizations

709

How do I get tax-exempt status?

710

Does an exempt organization have to file Form 199?

736

I have exempt status. Do I need to file Form 100 or Form 109 in addition to Form 199?

 

Minimum Tax and Estimate Tax

712

What is the minimum franchise tax?

714

My corporation is not doing business; does it have to pay the minimum franchise tax?

 

Billings and Miscellaneous Notices

503

How do I file a protest against a Notice of Proposed Assessment?

723

I received a bill for $250. What is this for?

 

Corporate Dissolution

724

How do I dissolve my corporation?

 

Limited Liability Companies (LLCs)

750

How do I organize or register an LLC?

752

What tax forms do I use to file as an LLC?

753

When is the annual tax payment due?

 

Miscellaneous

700

Who do I need to contact to start a business?

701

I need a state Employer ID number for my business. Who do I contact?

703

How do I incorporate?

737

Where do I send my payment?