text:
(a) For taxable years beginning before January 1, 2000, an annual tax is hereby imposed upon every financial corporation doing business within the limits of this state and taxable under the provisions of Section 27 of Article XIII of the Constitution of this state, for the privilege of exercising its corporate franchises within this state, according to or measured by its net income, upon the basis of its net income for the next preceding income year at the rate provided under Section 23186.

(b) For purposes of this article, the term “financial corporation” does not include any corporation, including a wholly owned subsidiary of a bank or bank holding company, if the principal business activity of such entity consists of leasing tangible personal property.

(c) (1) For the first taxable year beginning on or after January 1, 2000, the tax imposed under this section shall be the sum of both of the following:

(A) A tax according to or measured by net income, to be computed at the rate provided under Section 23186 upon the basis of the net income for the next preceding income year, but not less than the minimum tax specified in Section 23153.

(B) A tax according to or measured by net income, to be computed at the rate provided under Section 23186 upon the basis of the net income for the first taxable year beginning on or after January 1, 2000, but not less than the minimum tax specified in Section 23153.

(2) Except as provided in paragraph (1), for taxable years beginning on or after January 1, 2000, the tax imposed under this section shall be a tax according to or measured by net income, to be computed at the rate provided under Section 23186 upon the basis of the net income for that taxable year, but not less than the minimum tax specified in Section 23153.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 52. Effective January 1, 2001.)


kind: section

code: RTC

text:
Notwithstanding Section 23183, every financial corporation doing business within the limits of this state and not exempted from taxation by the Constitution of this state or by this part, shall annually pay to the state for the privilege of exercising its corporate franchises within this state, a tax determined as follows:

(a) If a financial corporation commences to do business and ceases doing business in the same taxable year, the tax for that taxable year shall be according to or measured by its net income for that year, at the rate provided under Section 23186.

(b) (1) With respect to taxable years beginning before January 1, 2000, other than the year of commencement described in subdivision (a) or the year of cessation described in subdivision (c), a tax according to or measured by its net income, to be computed at the rate prescribed in Section 23186 upon the basis of its net income for the next preceding income year.

(2) With respect to taxable years beginning on or after January 1, 2000 (other than the first taxable year beginning on or after that date), the tax for the taxable year (including the taxable year of commencement and the taxable year of cessation) shall be a tax according to or measured by its net income, to be computed at the rate prescribed in Section 23186 upon the basis of its net income for the taxable year.

(c) With respect to financial corporations, which cease doing business in a taxable year beginning before January 1, 2000, other than those described in subdivision (a), the tax for the taxable year of cessation shall be:

(1) According to or measured by its net income for the next preceding income year to be computed at the rate prescribed in Section 23186, plus

(2) According to or measured by its net income for the income year during which the financial corporation ceased doing business, to be computed at the rate prescribed in Section 23186.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 53. Effective January 1, 2001.)

division: 2. OTHER TAXES

part: 11. CORPORATION TAX LAW

chapter: 2. The Corporation Franchise Tax

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 3. Tax on Banks and Financial Corporations


text: Notwithstanding Section 23183, every financial corporation not exempted from taxation by the provisions of the Constitution of this state or by this part which dissolves or withdraws, shall pay a tax for its taxable year of dissolution or withdrawal according to or measured by its net income for the taxable year in which it ceased doing business, to be computed at the rate prescribed in Section 23186 for its taxable year of dissolution or withdrawal, unless the income has previously been included in the measure of tax for any taxable year.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 54. Effective January 1, 2001.)

article: 3. Tax on Banks and Financial Corporations


text: For taxable years ending on or after December 31, 1995, the rate of tax on banks and financial corporations shall be the rate of tax specified in Section 23151, plus 2 percent.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 55. Effective January 1, 2001.)


text: Upon the request of a taxpayer under this chapter, the tax-collecting officer of a county, city, or other political subdivision of this State, shall furnish an official receipt for real and personal property taxes paid to him setting forth a description of such property, the assessed valuation thereof, the rate of tax, the amount of taxes paid, and the beginning and ending of the year for which the taxes are paid.

history: (History: Added by Stats. 1949, Ch. 557.)


text: In the event that taxes, interest, or penalties have been or shall be assessed against, paid by, or collected from a taxpayer under a subdivision of Section 23181 or 23183.1, which assessment, payment, or collection should have been made under a different subdivision of those sections, the taxes, interest, or penalties shall be considered as having been assessed, paid, or collected under that different subdivision as of the date or dates they were made.

history: (History: Amended by Stats. 2000, Ch. 415, Sec. 3. Effective January 1, 2001.)


text:
(a) In the case of a taxpayer whose tax for the first taxable year was computed under Sections 23222 to 23224, inclusive (or corresponding sections of prior laws), there shall be allowed as a credit against the tax for the taxable year of dissolution or withdrawal, the excess of the tax paid over the minimum tax for the first taxable year which constituted a full 12 months of doing business in this state and whose income has been included in the measure of tax of a succeeding taxable year.

(b) Any credit previously allowed under this section or for a year in which the taxpayer ceased doing business shall not be allowed again in computing a credit under this section.

history: (History: Amended by Stats. 1977, Ch. 552.)

article: 3.5. Credit for Prepaid Tax

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 3.5. Credit for Prepaid Tax


text:
(a) In the case of a taxpayer who has been a transferee in a reorganization to which Sections 23251 to 23254, inclusive, or corresponding sections of prior laws, were applicable, there shall be allowed as a credit for the taxable year of dissolution or withdrawal, the excess of the tax paid over the minimum tax paid by prior transferors or by the transferee as a transferor under Sections 23222 to 23224, inclusive, or corresponding sections of prior laws, for the first taxable year of the transferors that constituted a full 12 months of doing business and whose income has been included in the measure of tax of a succeeding taxable year.

(b) The credit allowable under this section shall be in addition to any credit that may be allowable to the taxpayer under Section 23201. However, any credit previously allowed under Section 23201, under this section, or for a year in which the taxpayer or transferor ceased doing business, shall not be allowed again in computing a credit under this section.

history: (History: Amended by Stats. 2006, Ch. 538, Sec. 626. Effective January 1, 2007.)

article: 3.5. Credit for Prepaid Tax


text: The credits provided by Sections 23201 and 23202 shall be allowable only upon submission by the taxpayer of evidence establishing to the satisfaction of the Franchise Tax Board the amount of the tax paid pursuant to Sections 23222 to 23224, inclusive (or corresponding sections of prior laws), and with respect to which the credit is claimed.

history: (History: Added by Stats. 1971, Ch. 1304.)

article: 3.5. Credit for Prepaid Tax


text:
(a) No credit under this article shall be allowed or made after four years from the last day prescribed for filing the return for the taxable year of dissolution or withdrawal, or within the periods prescribed under Article 1 of Chapter 22, whichever period expires the latest, unless before the expiration of such period a claim therefor is filed by the taxpayer.

(b) Notwithstanding the provisions of Section 23204(a), no credit under this article shall be allowed or made to a taxpayer which has been suspended for a period of four continuous years beginning on or after January 1, 1975.

article: 3.5. Credit for Prepaid Tax


text:
(a) Any credit union that incorporates under the laws of this state or qualifies to transact intrastate business in this state shall thereupon prepay a tax of twenty-five dollars ($25) as provided in Section 23153. The prepayment shall be made to the Secretary of State with the filing of the articles of incorporation or the statement and designation by a foreign corporation. The Secretary of State shall transmit the amount of the prepayment to the Franchise Tax Board. The Franchise Tax Board shall certify to the Secretary of State on an individual or class basis those domestic or foreign corporations that are exempt from prepayment or for which prepayment to the Secretary of State is waived.

(b) This section shall become operative and apply beginning on or after January 1, 2001.

history: (History: Repealed (in Sec. 2) and added by Stats. 1999, Ch. 64, Sec. 3. Effective July 6, 1999. Section operative January 1, 2001, by its own provisions.)

article: 4. Commencing Corporations

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 4. Commencing Corporations


text:
(a) If a taxpayer commences to do business in this state during its first taxable year its tax for that year shall be adjusted upon the basis of the net income received during that taxable year, at the rate applicable to that year, a credit being allowed for the prepayment of the minimum tax. The return for the first taxable year, which shall be filed within 2 months and 15 days after the close of that year, shall also be the basis for the tax of said taxpayer for its second taxable year, if its first taxable year is a period of 12 months. In every case in which the first taxable year of a taxpayer constitutes a period of less than 12 months, or in which a taxpayer does business for a period of less than 12 months during its first taxable year, said taxpayer shall pay as a prepayment of the tax for its second taxable year a tax based on the income for the first taxable year computed under the law and at the rate applicable to the second taxable year, the same to be due and payable at the same times and in the same manner as if that amount were the entire amount of its tax for that year; and upon the filing of its tax return within 2 months and 15 days after the close of the second taxable year it shall pay a tax for said year, at the rate applicable to that year, based upon its net income received during that year, allowing a credit for the prepayment; but in no event, except as provided in Section 23332, shall the tax for the second taxable year be less than the amount of the prepayment for that year, and said return for its second taxable year shall also be the basis for the tax of said taxpayer for its third taxable year, if the second taxable year constitutes a period of 12 months.

(b) The provisions of subdivision (a) shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

history: (History: Amended by Stats. 1971, 1st Ex. Sess., Ch. 1.)

article: 4. Commencing Corporations


citation: RTC § 23222a

text:
In every case in which the second or succeeding taxable years of a commencing taxpayer constitute a period of less than 12 months or in which the taxpayer does business for a period of less than 12 months during its second or succeeding taxable years, the tax for such year or years shall be measured by the income of that period or periods subject to the continuation of the prepayment procedure outlined in Section 23222. In no event shall the income of any period or periods herein described be used as the measure of the tax for the succeeding taxable year, other than the prepayment, until the last short period is succeeded by a taxable period of 12 months, in which case the income of the last short period shall, if greater than the income of the 12-month period, constitute the measure of the tax for such 12-month period.

Thereafter the procedure outlined in Section 23222, in respect of the second and third taxable years, shall apply and the taxpayer shall not be subject to the provisions of this section.

In the event that a taxpayer is dissolved or withdraws from this state while subject to the provisions of this section, its tax for the year of dissolution or withdrawal shall be measured by its net income for such year. However, in no event shall the tax be less than the minimum tax provided by Section 23153.

The provisions of this section shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

article: 4. Commencing Corporations


text:
(a) When any taxpayer commences to do business in this state for the first time in any taxable year other than the year of incorporation or qualification, its tax for that taxable year and for the succeeding taxable year shall be computed in accordance with the provisions of Section 23222 relative to first and second taxable years, a credit being allowed for any tax payable under Section 23153 for the year in which it commences to do business.

(b) The provisions of subdivision (a) shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

article: 4. Commencing Corporations


text:
(a) Notwithstanding the provisions of Section 23222 and Section 23223, if a corporation, which has been subject to the provisions of Chapter 3 commences to do business in this state, its tax shall be computed as follows:

(1) Such corporation shall pay a tax under Chapter 3 for the whole of the year it commences to do such business;

(2) Such corporation shall, for the taxable year succeeding the year it commences to do business in this state, pay a tax under this chapter measured by its income for that taxable year;

(3) Such corporation shall, for its third taxable year, pay a tax, under this chapter, measured by its income for its second taxable year;

(4) Notwithstanding any other provisions of this part, such corporation shall file its return for such second and third taxable years on or before the 15th day of the third month following the close of its second taxable year.

(b) The provisions of subdivision (a) shall be applicable only if a taxpayer commenced doing business in this state before January 1, 1972.

article: 4. Commencing Corporations


text:
(a) After December 31, 1971, if a corporation which has been subject to the provisions of Chapter 3 commences to do business in this state, such corporation shall pay a tax under Chapter 3 for the whole of the taxable year it commences to do such business.

(b) For the purposes of Sections 23151.1 and 23183.1, the first taxable year subsequent to the taxable year the corporation commences to do such business (as described in subdivision (a)) shall be treated as the taxable year of commencement.

article: 4. Commencing Corporations


text: The adjusted tax, as provided in Sections 23222 to 23224.5, inclusive, for any taxable year in excess of the prepayment for that year, shall be due and payable as provided in Article 2 (commencing with Section 18601) of Chapter 2 of Part 10.2.

history: (History: Amended by Stats. 1993, Ch. 31, Sec. 34. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

article: 4. Commencing Corporations


text: In the case of the taxpayer taxable in the manner provided in Sections 23222 to 23224.5, inclusive, reporting income from any source on a deferred basis, the Franchise Tax Board is authorized to distribute or apportion such income, or deductions applicable thereto, if it determines that such distribution or apportionment is necessary in order to prevent avoidance of taxes or clearly to reflect the income of the taxpayer.

article: 4. Commencing Corporations


text: The term “reorganization,” as used in this chapter, shall have the same meaning as that term is defined in Section 368 of the Internal Revenue Code.

history: (History: Amended by Stats. 1984, Ch. 938, Sec. 26.2. Effective September 7, 1984.)

article: 5. Reorganized Corporations

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 5. Reorganized Corporations


text: Section 381(b) of the Internal Revenue Code, relating to operating rules, shall apply in determining the close of the taxable year. If a short period year is required by use of Section 381(b) of the Internal Revenue Code, the transferor’s short year tax shall be computed using the provisions of Section 23151.1 for general corporations or Section 23181 for banks and financial corporations.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 56. Effective January 1, 2001.)

article: 5. Reorganized Corporations


text:
(a) (1) When a taxpayer ceases to do business within the state during any taxable year and does not dissolve or withdraw from the state during that year, and does not resume doing business during the succeeding taxable year, its tax for the taxable year in which it resumes doing business prior to January 1, 2000, shall be the greater of the following:

(A) The tax computed upon the basis of the net income of the income year in which it ceased doing business, except where the income has already been included in the measure of a tax imposed by this chapter.

(B) The minimum tax prescribed in Section 23153.

(2) When a taxpayer ceases to do business within the state during any taxable year and does not dissolve or withdraw from the state during that year, and does not resume doing business during the succeeding taxable year, its tax for the taxable year in which it resumes doing business, on or after January 1, 2000, shall be according to or measured by its net income for the taxable year in which it resumes doing business.

(b) The tax shall be due and payable at the time the corporation resumes doing business, or on or before the due date of the return for its taxable year, whichever is later. All the provisions of this part relating to delinquent taxes shall be applicable to the tax if it is not paid on or before its due date.

(c) This section does not apply to a corporation that became subject to Chapter 3 (commencing with Section 23501) after it discontinued doing business in this state (see Section 23224.5).

(d) The amendments made to this section by the act adding this subdivision shall apply to taxable years beginning on or after January 1, 2016.

history: (History: Amended by Stats. 2016, Ch. 348, Sec. 4. (AB 1775) Effective January 1, 2017.)

article: 6. Corporations Resuming Business

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 6. Corporations Resuming Business


text:
(a) The tax imposed upon any taxpayer which has suffered the suspension or forfeiture provided in Section 23301, and which revives in any taxable year other than the taxable year in which suspension or forfeiture occurred, shall be computed in the same manner as provided in Sections 23222 to 23224, inclusive, relative to the computation of taxes upon taxpayers commencing to do business for the first time after incorporation or qualification. In addition to the taxes, penalties, and interest specified in Section 23305, such taxpayer shall prepay a tax in an amount equal to the minimum tax provided for in Section 23153 as a condition precedent to the issuance of a certificate of revivor.

(b) After December 31, 1971, and before January 1, 2000, the tax imposed upon any taxpayer which has suffered the suspension or forfeiture provided in Section 23301, and which revives in any taxable year other than the taxable year in which suspension or forfeiture occurred, shall be—(1) In the case of a taxpayer which was doing business in the year next preceding the year in which revivor took place, computed upon the basis of the net income for that next preceding income year,(2) In the case of a taxpayer which resumed doing business in the year of revivor, computed upon the basis of the net income for the year in which it ceased doing business, unless such income is or has otherwise been subject to tax,(3) In the case of a taxpayer which first commences to do business in the year of revivor, the minimum tax provided in Section 23153,(4) In no event less than the minimum tax provided in Section 23153.In addition to the taxes, penalties, and interest specified in Section 23305, such taxpayer shall prepay the minimum tax imposed by this subdivision as a condition precedent to the issuance of a certificate of revivor.

(c) After December 31, 1999, the tax imposed upon any taxpayer that has suffered the suspension or forfeiture provided in Section 23301, and that revives in any taxable year other than the taxable year in which suspension or forfeiture occurred, shall be computed upon the basis of the net income for the taxable year in which it revives, but in no event less than the minimum tax provided in Section 23153.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 58. Effective January 1, 2001.)

article: 6. Corporations Resuming Business


text:
Except for the purposes of filing an application for exempt status or amending the articles of incorporation or organization as necessary either to perfect that application or to set forth a new name, the powers, rights, and privileges of a domestic taxpayer may be suspended, and the exercise of the powers, rights, and privileges of a foreign taxpayer in this state may be forfeited, if any of the following conditions occur:

(a) If any tax, penalty, or interest, or any portion thereof, that is due and payable under Chapter 4 (commencing with Section 19001) of Part 10.2, or under this part, either at the time the return is required to be filed or on or before the 15th day of the 9th month following the close of the taxable year, is not paid on or before 6 p.m. on the last day of the 12th month after the close of the taxable year.

(b) If any tax, penalty, or interest, or any portion thereof, due and payable under Chapter 4 (commencing with Section 19001) of Part 10.2, or under this part, upon notice and demand from the Franchise Tax Board, is not paid on or before 6 p.m. on the last day of the 11th month following the due date of the tax.

(c) If any liability, or any portion thereof, which is due and payable under Article 7 (commencing with Section 19131) of Chapter 4 of Part 10.2, is not paid on or before 6 p.m. on the last day of the 11th month following the date that the tax liability is due and payable.

history: (History: Amended by Stats. 2024, Ch. 80, Sec. 121. (SB 1525) Effective January 1, 2025.)

article: 7. Suspension and Revivor

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 7. Suspension and Revivor


text: Except for the purposes of filing an application for exempt status or amending the articles of incorporation or organization as necessary either to perfect that application or to set forth a new name, the powers, rights, and privileges of a domestic taxpayer may be suspended, and the exercise of the powers, rights, and privileges of a foreign taxpayer in this state may be forfeited, if a taxpayer fails to file a tax return required by this part.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 3. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


text: Sections 23301, 23301.5, and 23775 shall apply to a foreign taxpayer only if the taxpayer is qualified or registered to do business in California. A taxpayer that is required under Section 2105 or 17708.02 of the Corporations Code to qualify or register to do business shall not be deemed to have qualified or registered to do business for purposes of this article unless the taxpayer has in fact qualified or registered with the Secretary of State.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 4. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


text:
(a) Forfeiture or suspension of a taxpayer’s powers, rights, and privileges pursuant to Section 23301, 23301.5, or 23775 shall occur and become effective only as expressly provided in this section in conjunction with Section 21020, which requires notice prior to the suspension of a taxpayer’s powers, rights, and privileges.

(b) The notice requirements of Section 21020 shall also apply to any forfeiture of a taxpayer’s powers, rights, and privileges pursuant to Section 23301, 23301.5, or 23775 and to any voidability pursuant to subdivision (d) of Section 23304.1.

(c) The Franchise Tax Board shall transmit the names of taxpayers to the Secretary of State as to which the suspension or forfeiture provisions of Section 23301, 23301.5, or 23775 are or become applicable, and the suspension or forfeiture therein provided for shall thereupon become effective. The certificate of the Secretary of State shall be prima facie evidence of the suspension or forfeiture.

(d) If a taxpayer’s powers, rights, and privileges are forfeited or suspended pursuant to Section 23301, 23301.5, or 23775, without limiting any other consequences of such forfeiture or suspension, the taxpayer shall not be entitled to sell, transfer, or exchange real property in California during the period of forfeiture or suspension.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 5. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


text: Notwithstanding the provisions of Section 23301 or 23301.5, any taxpayer that transacts business or receives income within the period of its suspension or forfeiture shall be subject to tax under the provisions of this chapter.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 6. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


text:
(a) Every contract made in this state by a taxpayer during the time that the taxpayer’s powers, rights, and privileges are suspended or forfeited pursuant to Section 23301, 23301.5, or 23775 shall, subject to Section 23304.5, be voidable at the request of any party to the contract other than the taxpayer.

(b) If a foreign taxpayer that neither is qualified to do business nor has an account number from the Franchise Tax Board, fails to file a tax return required under this part, any contract made in this state by that taxpayer during the applicable period specified in subdivision (c) shall, subject to Section 23304.5, be voidable at the request of any party to the contract other than the taxpayer.

(c) (1) For purposes of subdivision (b), the applicable period shall be the period beginning on January 1, 1991, or the first day of the taxable year for which the taxpayer has failed to file a return, whichever is later, and ending on the earlier of the date the taxpayer qualified to do business in this state or the date the taxpayer obtained an account number from the Franchise Tax Board.

(2) With regard to a limited liability company, the applicable period shall be the period beginning on January 1, 2014, or the first day of the taxable year for which the taxpayer has failed to file a return, whichever is later, and ending on the earlier of the date the taxpayer qualified to do business in this state or on the date the taxpayer obtained an account number from the Franchise Tax Board.

(d) If a taxpayer fails to file a tax return required under this part, to pay any tax or other amount owing to the Franchise Tax Board under this part or to file any statement or return required under Section 23772 or 23774, within 60 days after the Franchise Tax Board mails a written demand therefor, any contract made in this state by the taxpayer during the period beginning at the end of the 60-day demand period and ending on the date relief is granted under Section 23305.1, or the date the taxpayer qualifies to do business in this state, whichever is earlier, shall be voidable at the request of any party to the contract other than the taxpayer. This subdivision shall apply only to a taxpayer if the taxpayer has an account number from the Franchise Tax Board, but has not qualified to do business under the Corporations Code. In the case of a taxpayer that has not complied with the 60-day demand, the taxpayer’s name, Franchise Tax Board account number, date of the demand, date of the first day after the end of the 60-day demand period, and the fact that the taxpayer did not within that period pay the tax or other amount or file the statement or return, as the case may be, shall be a matter of public record.

history: (History: Amended by Stats. 2014, Ch. 325, Sec. 3. (AB 1143) Effective September 15, 2014.)

article: 7. Suspension and Revivor


text: A party that has the right to declare a contract to be voidable pursuant to Section 23304.1 may exercise that right only in a lawsuit brought by either party with respect to the contract in a court of competent jurisdiction and the rights of the parties to the contract shall not be affected by Section 23304. 1 except to the extent expressly provided by a final judgment of the court, which judgment shall not be issued unless the taxpayer is allowed a reasonable opportunity to cure the voidability under Section 23305.1. If the court finds that the contract is voidable under Section 23304.1, the court shall order the contract to be rescinded. However, in no event shall the court order rescission of a taxpayer’s contract unless the taxpayer receives full restitution of the benefits provided by the taxpayer under the contract.

history: (History: Added by Stats. 1990, Ch. 926, Sec. 8.)

article: 7. Suspension and Revivor


text: Any taxpayer which has suffered the suspension or forfeiture provided for in Section 23301 or 23301.5 may be relieved therefrom upon making application therefor in writing to the Franchise Tax Board and upon the filing of all tax returns required under this part, and the payment of the tax, additions to tax, penalties, interest, and any other amounts for nonpayment of which the suspension or forfeiture occurred, together with all other taxes, additions to tax, penalties, interest, and any other amounts due under this part, and upon the issuance by the Franchise Tax Board of a certificate of revivor. Application for the certificate on behalf of any taxpayer which has suffered suspension or forfeiture may be made by any stockholder or creditor, by a majority of the surviving trustees or directors thereof, by an officer, or by any other person who has interest in the relief from suspension or forfeiture.

history: (History: Amended by Stats. 1991, Ch. 1082, Sec. 6. Applicable to income years beginning on or after January 1, 1991, by Sec. 12 of Ch. 1082.)

article: 7. Suspension and Revivor


text:
(a) A taxpayer may make application to the Franchise Tax Board for relief from the voidability provisions of Section 23304.1. To be relieved from voidability, the taxpayer shall do all of the following:

(1) Provide the Franchise Tax Board with an application for relief from contract voidability in a form and manner prescribed by the Franchise Tax Board.

(2) Include on the application the period for which relief is requested in accordance with subdivision (b).

(3) File any tax returns required to be filed under this part with the Franchise Tax Board, including returns for the period for which relief is requested.

(4) Pay any tax, additions to tax, penalties, interest, and any other amounts owing to the Franchise Tax Board, including any liability attributable to the period for which relief is requested.

(5) Pay any penalty imposed under subdivision (b) for the period for which relief is requested.

(6) In the case of a taxpayer that applies for and enters into an approved voluntary disclosure agreement in accordance with Article 8 (commencing with Section 19191) of Chapter 4 of Part 10.2, for purposes of this section, the taxpayer shall be considered to have met the requirements of paragraphs (3), (4), and (5) if the taxpayer fulfills to the satisfaction of the Franchise Tax Board all the specifications of the voluntary disclosure agreement within the meaning of paragraph (2) of subdivision (d) of Section 19191 and if the Franchise Tax Board has not found that any of the circumstances described in Section 19194 has rendered the voluntary disclosure agreement null and void.

(b) (1) Except as provided in paragraph (2), both of the following shall apply:

(A) The period for which relief is requested shall begin on the date that one of the taxpayer’s taxable years begins and ends on the date that relief is granted.

(B) The Franchise Tax Board shall assess a daily penalty equal to one hundred dollars ($100) for each day of the period for which relief from voidability is granted, but not to exceed a total penalty equal to the amount of the tax for the period for which relief is requested.

(2) If an application for relief from voidability is filed for a period in which an application for revivor has been filed and the certificate of revivor has been issued, all of the following shall apply:

(A) The period for which relief is requested shall begin on the date the taxpayer’s powers, rights, and privileges had been suspended or forfeited and ends on the date relief is granted.

(B) The Franchise Tax Board shall assess a daily penalty equal to one hundred dollars ($100) for each day of the period for which relief from voidability is granted, but not to exceed a total penalty equal to that amount of the tax that would be imposed under Sections 17941 and 17942 or Section 23151 and, except as provided in subparagraph (C), that penalty shall be equal to no less than the amount of the minimum tax provided under Section 17941 or 23153 for the period for which relief is requested.

(C) In the case of an exempt organization or trust subject to Article 2 (commencing with Section 23731) of Chapter 4 (the tax on unrelated business taxable income), the daily penalty provided in subparagraph (B) shall not exceed a total penalty equal to the amount of tax imposed upon its unrelated business taxable income for the period for which relief is requested.

(3) Any penalty imposed under this subdivision shall, subject to Section 23305.2, be due and payable on demand by the Franchise Tax Board.

(c) (1) Upon satisfaction of the conditions specified in subdivision (a), including through the application of Section 23305.2, the following shall apply:

(A) All contracts entered into during the period for which relief is granted that have not been rescinded by a final court order pursuant to Section 23304.5 may be enforced in the same manner and to the same extent, with regard to both the parties to the contract and any third parties, as if the contract had never been voidable.

(B) Any sale, transfer, or exchange of real property in California during the period for which relief is granted and which the taxpayer at that time was not entitled to sell, transfer, or exchange by reason of subdivision (d) of Section 23302 and which has not been rescinded by a final court order pursuant to Section 23304.5, shall be as valid as if the taxpayer had not been subject to subdivision (d) of Section 23302 at the time of the sale, transfer, or exchange.

(2) Upon being granted relief from voidability, the Franchise Tax Board shall certify that relief to the taxpayer in a form and manner as prescribed by the Franchise Tax Board. The certificate shall be issued or mailed to the taxpayer, or as directed by the taxpayer, and shall indicate the period for which relief is granted.

(d) The fact that a certificate of relief from voidability was issued pursuant to this section and the information contained on that certificate shall be subject to public disclosure. The certificate shall be prima facie evidence of the relief from voidability for contracts entered into during the period of relief stated on the certificate and the certificate may be recorded in the office of the county recorder of any county of this state.

(e) Subject to limitations set forth in Section 17 of Chapter 926 of the Statutes of 1990, a taxpayer that received a certificate of revivor between January 1, 1990, and January 1, 1991, may apply for relief from voidability under this section.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 7. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


text: Notwithstanding Sections 23305 and 23305.1 that require a taxpayer to pay any liability to the Franchise Tax Board as a condition to revivor or relief from voidability, the Franchise Tax Board shall issue a certificate of revivor under Section 23305, or of relief from voidability under Section 23305.1, if the taxpayer provides the Franchise Tax Board with an assumption of liability, or a bond, deposit, or other security for taxpayer’s liability, that is acceptable to the Franchise Tax Board. The Franchise Tax Board shall notify the person filing the application for revivor or relief from voidability of the amount of the bond, deposit, or other security, or of the terms of an assumption of liability, that must be furnished as a condition of the revivor or the relief from voidability. Obtaining revivor or voidability relief by securing the debt pursuant to this section shall not constitute an admission of liability by the taxpayer, nor relieve the taxpayer or any individual or corporation from liability for any taxes, additions to tax, penalties, or interest imposed by this part. A taxpayer that provides an assumption of liability or a bond, deposit, or other security to obtain revivor or relief from voidability may, notwithstanding Section 23305 or 23305.1, file any returns required under those sections within a reasonable time after relief is granted by the Franchise Tax Board.

history: (History: Amended by Stats. 1997, Ch. 605, Sec. 68. Effective January 1, 1998.)

article: 7. Suspension and Revivor


text:
For purposes of this article:

(a) “Taxpayer” means either:

(1) A corporation subject to tax under this chapter.

(2) A business entity organized under a statute or law, under a state or a federally recognized Indian tribe, under another jurisdiction, if the statute or law describes or refers to the entity as a limited liability company or if regulations of the Franchise Tax Board identify a business entity organized under the laws of a foreign country as a limited liability company.

(b) With regard to a limited liability company:

(1) “Articles of incorporation” shall include a limited liability company’s articles of organization.

(2) “Tax” shall include the tax and fee imposed by Sections 17941 and 17942, or former Sections 23091 and 23092, respectively.

history: (History: Amended by Stats. 2014, Ch. 325, Sec. 4. (AB 1143) Effective September 15, 2014.)

article: 7. Suspension and Revivor


citation: RTC § 23305a

text: Before the certificate of revivor is issued by the Franchise Tax Board, it shall obtain from the Secretary of State an endorsement upon the application of the fact that the name of the taxpayer then meets the requirements of subdivision (b) of Section 201 or subdivision (b) of Section 17701.08 of the Corporations Code in the case of a domestic taxpayer or of subdivision (b) of Section 2106 or Section 17708.05 of the Corporations Code in the case of a foreign taxpayer that has qualified to do business. The reference to amendment of the articles of incorporation to set forth a new name contained in Sections 23301, 23301.5, and 23775 includes in the case of a foreign taxpayer the filing of an amended statement and designation to set forth its new name or to set forth an assumed name under subdivision (b) of Section 2106 or Section 17708.05 of the Corporations Code. Upon the issuance of the certificate by the Franchise Tax Board the taxpayer therein named shall become reinstated but the reinstatement shall be without prejudice to any action, defense, or right which has accrued by reason of the original suspension or forfeiture, except that contracts which were voidable pursuant to Section 23304.1, but which have not been rescinded pursuant to Section 23304.5, may have that voidability cured in accordance with Section 23305.1. The certificate of revivor shall be prima facie evidence of the reinstatement and the certificate may be recorded in the office of the county recorder of any county of this state.

history: (History: Amended by Stats. 2024, Ch. 80, Sec. 122. (SB 1525) Effective January 1, 2025.)

article: 7. Suspension and Revivor


citation: RTC § 23305b

text: Notwithstanding Section 23305, the Franchise Tax Board may revive a taxpayer to good standing without full payment of the taxes, penalties, and interest due if it determines that the revivor will improve the prospects for collection of the full amount due. This revivor may be limited as to time or may limit the functions the revived taxpayer can perform, or both. The taxpayer’s powers, rights, and privileges may again be suspended or forfeited if the Franchise Tax Board determines that the prospects for collection of the full amount due have not been improved by the revivor of the taxpayer.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 9. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


citation: RTC § 23305c

text:
(a) Upon issuance of the certificate of revivor, the Franchise Tax Board shall transmit to the Secretary of State the revived taxpayer’s name and its entity number.

(b) The taxpayer’s name and number, the fact that the taxpayer’s powers, rights, and privileges have been revived and the effective date of the revivor shall be a matter of public record.

(c) If the Franchise Tax Board determines that a suspension or forfeiture was in error by the Franchise Tax Board, the Franchise Tax Board shall, in connection with the revivor, indicate that the taxpayer is “restored.” The status of the restored taxpayer shall be retroactive to the date of suspension or forfeiture as if there had been no suspension or forfeiture.

(d) If the Franchise Tax Board determines that the mailing of the 60-day demand notice referred to in subdivision (d) of Section 23304.1 was in error or that the Franchise Tax Board’s original determination as to compliance with the 60-day demand notice was in error, the Franchise Tax Board’s revised conclusions also shall be part of the public record referred to in that subdivision.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 10. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


citation: RTC § 23305d

text: A certificate of suspension or forfeiture from the Franchise Tax Board setting forth that the suspended or forfeited taxpayer has been notified of its liability for tax or requirement to file a return under this part and that the tax has not been paid or the return has not been filed, shall constitute prima facie evidence of the facts.

history: (History: Added by renumbering Section 23572 by Stats. 1990, Ch. 926, Sec. 16.)

article: 7. Suspension and Revivor


citation: RTC § 23305e

text:
(a) The Franchise Tax Board may provide letters of good standing, verifying a taxpayer’s status for doing business in California, at a charge reflecting the reasonable costs to the department of responding to these requests.

(b) Fees received under this section shall be handled in accordance with Section 19604.

history: (History: Amended by Stats. 2023, Ch. 209, Sec. 11. (AB 1765) Effective January 1, 2024.)

article: 7. Suspension and Revivor


text:
(a) The Franchise Tax Board may abate, upon written request by a qualified entity, unpaid qualified taxes, interest, and penalties for the taxable years in which the qualified entity certifies, under penalty of perjury, that it was not doing business, within the meaning of subdivision (a) of Section 23101, has ceased doing business, and does not have any remaining assets in the business.

(b) For purposes of this section:

(1) “Qualified entity” means a domestic corporation subject to Division 1 (commencing with Section 100) of Title 1 of the Corporations Code or a domestic limited liability company subject to Title 2.6 (commencing with Section 17701.01) of the Corporations Code that satisfies either of the following conditions:

(A) Was never doing business, within the meaning of subdivision (a) of Section 23101, in this state at any time after the time of its incorporation in this state.

(B) Was previously doing business, within the meaning of subdivision (a) of Section 23101, and has filed all returns required under Section 18601, 18633, or 18633.5 for the tax years prior to cessation of doing business.

(2) “Qualified taxes, interest, and penalties” means tax imposed under Section 17941 or 23153, and associated interest and penalties, and any penalties imposed under Section 19141. “Qualified taxes, interest, and penalties” does not include tax imposed under Section 17942, 23501, or 23731, or associated interest or penalties, and does not include additional tax, penalties, or interest resulting from a final or pending state or federal audit.

(c) In no instance shall the taxes abated pursuant to subdivision (a) exceed the minimum or annual tax imposed under Section 17941 or 23153.

(d) A qualified entity shall establish that it has ceased all business operations and has no remaining assets at the time of filing the request for abatement pursuant to this section.

(e) The abatement of unpaid qualified tax, interest, and penalties pursuant to this section is conditioned on the dissolution of a corporation or the cancellation of a limited liability company of the qualified entity with the Secretary of State prior to the abatement.

(f) (1) The Franchise Tax Board may prescribe any regulations that may be necessary or appropriate to implement the purposes of this section.

(2) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the Franchise Tax Board pursuant to this section.

history: (History: Added by Stats. 2018, Ch. 679, Sec. 3. (AB 2503) Effective January 1, 2019.)

article: 7. Suspension and Revivor


text:
(a) If a qualified entity, as defined by Section 23310, has been dissolved or canceled as described by Section 23310, but continues to do business within the meaning of subdivision (a) of Section 23101, or has any remaining assets which were not disclosed by the qualified entity at the time of request for abatement under Section 23310, the total tax, interest, and penalties that were abated pursuant to Section 23310 shall be immediately due and payable. In addition, a penalty in an amount equal to 50 percent of the total tax abated pursuant to Section 23310, plus accrued interest payable pursuant to Section 19101 on that amount for the period or periods beginning on the last date prescribed by law for the payment of that tax, determined without regard to extensions, and ending on the date the tax was abated, shall be imposed.

(b) The penalty imposed by this section is in addition to any other penalty imposed under Part 10 (commencing with Section 17001), Part 10.2 (commencing with Section 18401) and Part 11 (commencing with Section 23001).

(c) Article 3 (commencing with Section 19031) of Chapter 4 of Part 10.2, relating to deficiency assessments, shall not apply with respect to the assessment or collection of any penalty imposed by subdivision (a) or to previously abated tax, interest, and penalties that are due and payable pursuant to this section.

history: (History: Added by Stats. 2018, Ch. 679, Sec. 4. (AB 2503) Effective January 1, 2019.)

article: 7. Suspension and Revivor


text:
(a) For the purposes of this article, the effective date of dissolution of a corporation is the date on which the certified copy of the court decree, judgment, or order declaring the corporation duly wound up and dissolved is filed in the office of the Secretary of State or the date on which the certificate of winding up, if necessary, and the certificate of dissolution are filed in the office of the Secretary of State. For the purposes of this article, the effective date of withdrawal of a foreign corporation is the date on which the certificate of withdrawal is filed in the office of the Secretary of State.

(b) The Secretary of State shall, through an information program and by forms and instructions provided to taxpayers, recommend that all documents required by this article to be filed with the Secretary of State be sent, if mailed, by certified mail with return receipt requested. The Secretary of State shall also provide the taxpayers a filing response within 21 days of receipt.

history: (History: Amended by Stats. 2022, Ch. 617, Sec. 131. (SB 1202) Effective January 1, 2023.)

article: 8. Dissolution or Withdrawal

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 8. Dissolution or Withdrawal


text:
(a) Except in the case of a taxpayer subject to the provisions of Section 23222a, any taxpayer which is dissolved or withdraws from the state during any taxable year shall pay a tax only for the months of the taxable year which precede the effective date of the dissolution or withdrawal, according to or measured by (1) the net income of the preceding income year or (2) a percentage of net income determined by ascertaining the ratio which the months of the taxable year, preceding the effective date of dissolution or withdrawal, bears to the months of the income year, whichever is the lesser amount. The taxes levied under this chapter shall not be subject to abatement or refund because of the cessation of business or corporate existence of any taxpayer pursuant to a reorganization, consolidation, or merger (as defined by Section 23251). In any event, each corporation shall pay a tax not subject to offset for the period in an amount equal to the minimum tax prescribed by Section 23153.

(b) The provisions of subdivision (a) shall be applied only with respect to taxpayers which dissolve or withdraw before January 1, 1973. On and after that date, the tax for the taxable year in which the taxpayer ceases doing business, dissolves, or withdraws shall be determined under the appropriate provisions of Section 23151.1, 23153, 23181, or 23183, whichever is applicable.

(c) (1) A corporation shall not be subject to the minimum franchise tax imposed by this chapter for a taxable year if the corporation does all of the following:

(A) Files a timely final franchise tax return for a taxable year with the Franchise Tax Board.

(B) Does not do business in this state after the end of the taxable year for which the final franchise tax return was filed.

(C) (i) In the case of a corporation other than a corporation described in clause (ii), files a certificate of dissolution or surrender with the Secretary of State, in accordance with Sections 1809, 1905, 2112, 6615, 8615, and 12635 of the Corporations Code and Section 3126 of the Financial Code, before the end of the 12-month period beginning with the date the final franchise tax return was filed.

(ii) In the case of a limited liability company that is a corporation pursuant to subdivision (c) of Section 23038, files a certificate of cancellation with the Secretary of State, in accordance with Section 17707.02 or 17708.07 of the Corporations Code, before the end of the 12-month period beginning with the date the final franchise tax return was filed.

(2) For purposes of this subdivision, a “final franchise tax return” is a return filed pursuant to Section 18601 on or before the due date of the return, as extended, that the taxpayer designates in the manner prescribed by the Franchise Tax Board as the taxpayer’s final franchise tax return for purposes of the tax imposed under this chapter. A final franchise tax return for purposes of the tax imposed under this chapter is a return filed pursuant to Section 18601 where the taxpayer is not required to file a subsequent return to reflect the imposition of tax under this chapter.

history: (History: Amended by Stats. 2012, Ch. 419, Sec. 29. (SB 323) Effective January 1, 2013. Operative January 1, 2014, by Sec. 32 of Ch. 419.)

article: 8. Dissolution or Withdrawal


text: If a financial corporation ceases doing business, dissolves, or withdraws from the state during any taxable year, the tax for the taxable year during which cessation of doing business, dissolution or withdrawal occurs shall be computed as prescribed by subdivision (b) or (d) of Section 23183, 23183.1, or 23183.2.

history: (History: Amended by Stats. 1997, Ch. 605, Sec. 70. Effective January 1, 1998.)

article: 8. Dissolution or Withdrawal


text:
(a) A taxpayer subject to Section 23186 shall, if it dissolves or withdraws prior to the date the rate is determined under Section 23186, pay a tax under Section 23332 at the maximum rate prescribed by Section 23186. If the rate is subsequently determined to be less than the maximum prescribed by Section 23186, a refund shall, within 30 days of that determination, be made as prescribed by Chapter 6 (commencing with Section 19301) of Part 10.2.

(b) That part of the tax thus determined which is in excess of the rate specified in Section 23151 shall be collected as a demand for second installment under Chapter 4 (commencing with Section 19001) of Part 10.2.

history: (History: Amended by Stats. 1993, Ch. 31, Sec. 37. Effective June 16, 1993. Operative January 1, 1994, by Sec. 83 of Ch. 31.)

article: 8. Dissolution or Withdrawal


text:
(a) Any return filed pursuant to Section 18601 that the taxpayer designates in the appropriate place on the form provided by the Franchise Tax Board as the taxpayer’s final franchise tax return as the result of a dissolution or withdrawal shall be treated as a request for information on how to properly dissolve or withdraw.

(b) If a taxpayer has filed a return as described in subdivision (a), the Franchise Tax Board shall provide the taxpayer with information regarding all documents that are required by this article to be filed with the Franchise Tax Board and the Secretary of State.

history: (History: Amended by Stats. 2006, Ch. 773, Sec. 57. Effective September 29, 2006.)

article: 8. Dissolution or Withdrawal


text:
“Affiliated group” means one or more chains of corporations connected through stock ownership with a common parent corporation if during the period when the income was accrued or realized and on the 16th day of the first month after the close of the taxable year—

(a) At least 80 percent of the stock of each of the corporations, except the common parent corporation, is owned directly by one or more of the other corporations; and

(b) The common parent corporation owns directly at least 80 percent of the stock of at least one of the other corporations; and

(c) Each of the corporations except the common parent corporation is either (1) a corporation whose principal business is that of a common carrier by railroad or (2) a corporation the assets of which consist principally of stock in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of determining whether the principal business of a corporation is that of a common carrier by railroad, if a common carrier by railroad has leased its railroad properties and such properties are operated as such by another common carrier by railroad, the business of receiving rents for such railroad properties shall be considered as the business of a common carrier by railroad.

The provisions of this section shall not preclude the application of Chapter 17 (commencing with Section 25101) of this part.

Except in paragraph (c), “stock” does not include nonvoting stock which is limited and preferred as to dividends.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 62. Effective January 1, 2001.)

article: 9. Affiliated Railroads

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2. The Corporation Franchise Tax > 9. Affiliated Railroads


text: An affiliated group, subject to the provisions of this article, shall have the privilege of making a consolidated return for the taxable year in lieu of separate returns. The making of a consolidated return shall be upon the condition that all the corporations, which have been members of the affiliated group at any time during the taxable year for which the return is made, consent to all regulations under Section 23363 prescribed prior to the making of such return and the making of a consolidated return shall be considered as such consent. In the case of a corporation, which is a member of the affiliated group for a fractional part of the taxable year, the consolidated return shall include the income of such corporation for such part of the taxable year as it is a member of the affiliated group. In the case of a common parent company which is not itself a common carrier by railroad the consolidated return shall include on a consolidated-return basis only the income received from affiliates which are common carriers by railroad.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 63. Effective January 1, 2001.)

article: 9. Affiliated Railroads


text: The Franchise Tax Board shall prescribe such regulations as it may deem necessary in order that the tax liability of any affiliated group of corporations making a consolidated return and of each corporation in the group, both during and after the period of affiliation, may be determined, computed, assessed, collected, and adjusted in such manner as to reflect the proper income.

history: (History: Amended by Stats. 1951, Ch. 374.)

article: 9. Affiliated Railroads


text: If a consolidated return is made subject to the provisions of this article, the tax imposed under this chapter shall be computed as a unit upon the consolidated net income of the group except as hereinafter provided. The parent corporation and each subsidiary, a member of the group during any part of a consolidated period, shall be severally liable for the tax, including any deficiency in respect thereof, computed upon the consolidated net income of the group. If a subsidiary by reason of a bona fide sale of stock for fair value has ceased to be a member of the affiliated group, its liability shall remain unchanged, except that if such cessation occurred prior to the date upon which any such deficiency is assessed, such deficiency, in the case of such former subsidiary, shall be reduced to an amount equal to such part as may be allocable to it upon the basis of the consolidated net income properly assignable to it. In no case, however, shall any demand for the payment of any deficiency be made, or any proceeding in court for the collection thereof be begun against such former subsidiary prior to the determination by the Franchise Tax Board that the amount of the deficiency cannot be collected from the parent corporation and the corporations, if any, remaining members of the affiliated group.

history: (History: Amended by Stats. 1951, Ch. 71.)

article: 9. Affiliated Railroads


citation: RTC § 23364a

text: Where a member of an affiliated group filing a consolidated return is a corporation commencing to do business in this state for the first time after August 27, 1937, its tax for the taxable year of commencement shall be the tax for such year as provided for in subdivisions (a) and (b) of Section 23151.1.

history: (History: Amended by Stats. 1977, Ch. 552.)

article: 9. Affiliated Railroads


text:
(a) For the purpose of this chapter, Part VI of Subchapter A of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to alternative minimum tax, shall apply as it read on January 1, 2015, except as otherwise provided.

(b) A corporation electing under Chapter 4.5 (commencing with Section 23800) to be treated as an “S corporation” shall not be subject to the tax imposed by this chapter.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 76. (SB 711) Effective October 1, 2025.)

chapter: 2.5. Alternative Minimum Tax

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 2.5. Alternative Minimum Tax


text:
(a) There shall be allowed as a credit against the regular tax (as defined by subdivision (c) of Section 23455), for any taxable year, an amount equal to the minimum tax credit for that taxable year.

(b) For purposes of subdivision (a), the minimum tax credit shall be determined in accordance with Section 53 of the Internal Revenue Code, except as otherwise provided in this part.

(c) For purposes of this chapter, the amount determined under Section 53(c)(1) of the Internal Revenue Code shall be the regular tax as defined by subdivision (c) of Section 23455, reduced by the sum of the credits allowable under this part other than any credit which reduces the tax below the tentative minimum tax, as defined by Section 23455.

(d) Section 53(e) of the Internal Revenue Code, relating to the application to applicable corporations, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 77. (SB 711) Effective October 1, 2025.)


text:
For purposes of this part, Section 55 of the Internal Revenue Code is modified as follows:

(a) Section 55(b)(1) of the Internal Revenue Code, relating to the amount of tentative minimum tax, is modified by requiring the tentative minimum tax for the taxable year to be imposed as follows:

(1) With respect to corporations subject to tax under Chapter 2 (commencing with Section 23101), other than banks or financial corporations, according to or measured by net income, for the privilege of doing business within this state, at a rate of 7 percent upon the basis of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.

(2) With respect to corporations subject to tax under Chapter 3 (commencing with Section 23501), on net income from sources within this state, at a rate of 7 percent upon the basis of so much of the alternative minimum taxable income for the taxable year as exceeds the exemption amount.

(3) With respect to organizations or trusts subject to tax under Article 2 (commencing with Section 23731) of Chapter 4, on the unrelated business income from sources within this state, at a rate of 7 percent upon the basis of so much of the alternative taxable income for the taxable year as exceeds the exemption amount.

(4) With respect to banks subject to tax under Section 23181, according to or measured by net income, for the privilege of doing business within this state, in an amount equal to the sum of the following:

(A) At a rate of 7 percent upon the basis of so much of the alternative minimum taxable income as exceeds the exemption amount.

(B) At the rate determined under Section 23186, less the rate prescribed by Section 23151, upon the basis of net income for the taxable year.

(5) With respect to financial corporations subject to tax under Section 23183, according to or measured by net income, for the privilege of doing business within this state, in an amount equal to the sum of the following:

(A) At a rate of 7 percent upon the basis of so much of the alternative minimum taxable income as exceeds the exemption amount.

(B) At the rate determined under Section 23186, less the rate prescribed by Section 23151, upon the basis of net income for the taxable year.

(b) Section 55(b)(2) of the Internal Revenue Code, relating to the definition of alternative minimum taxable income, is modified as follows:

(1) For corporations whose net income is determined under Chapter 17 (commencing with Section 25101), alternative minimum taxable income shall be allocated and apportioned in the same manner as net income is allocated and apportioned for purposes of the regular tax.

(2) With respect to taxpayers subject to Article 4 (commencing with Section 23221) of Chapter 2, Article 4 (commencing with Section 23221) to Article 9 (commencing with Section 23361), inclusive, shall apply to the tax imposed by this section except that Section 23221 shall not apply.

(3) For purposes of computing the alternative minimum tax for taxable years in which a taxpayer commenced doing business, dissolves, withdraws, or ceases doing business, Sections 18601, 23151, 23151.1, 23151.2, 23181, 23183, 23183.1, 23183.2, 23201 to 23204, inclusive, 23222 to 23224.5, inclusive, 23282, 23332.5, and 23504 shall be applied with due regard for the rate and alternative minimum taxable income prescribed by this chapter.

(c) Section 55(c) of the Internal Revenue Code, relating to the definition of regular tax, is modified to read:

(1) For purposes of this chapter, “regular tax” means the amount of tax imposed under Chapter 2 (commencing with Section 23101) or Chapter 3 (commencing with Section 23501) or Article 2 (commencing with Section 23731) of Chapter 4, but does not include any amount imposed under paragraph (1) of subdivision (e) of Section 24667 or paragraph (2) of subdivision (f) of Section 24667.

(2) The tax specified in paragraph (1) shall be the amount determined prior to reduction by any credits against the tax.

(3) The amendments made to Section 55(c)(1) of the Internal Revenue Code by Section 12001(b)(4) of the Tax Cuts and Jobs Act, 2017 (Public Law 115-97), shall apply.

(d) The rate of 7 percent prescribed in subdivision (a) shall be 6.65 percent for any taxable year beginning on or after January 1, 1997. The change in rate provided in this subdivision shall be made without proration otherwise required by Section 24251.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 78. (SB 711) Effective October 1, 2025.)


text: Section 55(e) of the Internal Revenue Code, relating to exemption for small corporations, shall not apply.

history: (History: Added by Stats. 1998, Ch. 322, Sec. 64. Effective August 20, 1998.)


text:
For purposes of this part, Section 56 of the Internal Revenue Code is modified as follows:

(a) (1) Section 56(a)(2) of the Internal Revenue Code, relating to mining exploration and development costs, shall apply only to expenses incurred during taxable years beginning on or after January 1, 1988.

(2) Section 56(a)(5) of the Internal Revenue Code, relating to pollution control facilities, shall apply only to amounts allowable as a deduction under Section 24372.3.

(b) For purposes of applying Section 56(d) of the Internal Revenue Code, all references to “December 31, 1986,” are modified to read “December 31, 1987,” and all references to “January 1, 1987,” are modified to read “January 1, 1988.”

(c) Section 56(d)(1) of the Internal Revenue Code is modified to include the provisions of Section 25108.

(d) Section 56(g) of the Internal Revenue Code, relating to adjustments based on adjusted current earnings, is modified to provide that for corporations whose income is determined under Chapter 17 (commencing with Section 25101), adjusted current earnings shall be allocated and apportioned in the same manner as net income is allocated and apportioned for purposes of the regular tax. In addition, each of the following shall apply:

(1) Sections 56(g)(1)(A) and 56(g)(3) of the Internal Revenue Code are modified to provide that the term “adjusted current earnings” means the sum of the adjusted current earnings of that corporation apportionable to this state and the adjusted current earnings allocable to this state.

(2) Section 56(g)(1)(B) of the Internal Revenue Code is modified to provide that the term “alternative minimum taxable income” means the sum of the alternative minimum taxable income of that corporation apportionable to this state and the alternative minimum taxable income allocable to this state.

(e) Section 56(g)(4)(A) of the Internal Revenue Code is modified to provide the following:

(1) In the case of any property placed in service on or after January 1, 1981, and prior to January 1, 1987, other than residential rental property for which an election was made under former Section 24349.5, the amount allowable as depreciation or amortization with respect to that property shall be the same amount that would have been allowable for the taxable year had the taxpayer depreciated the property under the straight line method for each taxable year of the useful life (determined without regard to Section 24354.2) for which the taxpayer has held the property.

(2) In the case of any property placed in service on or after January 1, 1987, and prior to January 1, 1990, other than residential rental property for which an election was made under former Section 24349.5, the amount allowable as depreciation or amortization with respect to that property shall be determined by each of the following:

(A) Taking into account the adjusted basis of that property (as determined for purposes of computing alternative minimum taxable income) as of the close of the last taxable year beginning before January 1, 1990.

(B) Using the straight line method over the remainder of the recovery period applicable to that property under the alternative system of Section 168(g) of the Internal Revenue Code.

(3) The amendments made to paragraph (2) by the act adding this paragraph shall apply to taxable years beginning on or after January 1, 1990.

(4) The last sentence of Section 56(g)(4)(A)(i) of the Internal Revenue Code, shall not apply to taxable years beginning before January 1, 1998.

(f) (1) Section 56(g)(4)(C) of the Internal Revenue Code, relating to disallowance of items not deductible in computing earnings and profits, shall be modified as follows:

(A) (i) A deduction shall be allowed for amounts allowable as a deduction for purposes of the regular tax under Sections 24402, 24410, 24411, and 25106.

(ii) For each taxable year beginning on or after January 1, 1990, a deduction shall be allowed for amounts allowable as a deduction to a credit union for purposes of the regular tax under Section 24405.

(B) Section 56(g)(4)(C)(ii) of the Internal Revenue Code, relating to special rule for certain dividends, shall not be applicable.

(C) Section 56(g)(4)(C)(iii) of the Internal Revenue Code, relating to treatment of taxes on dividends from 936 corporations, shall not be applicable.

(D) Section 56(g)(4)(C)(iv) of the Internal Revenue Code, relating to special rule for certain dividends received by certain cooperatives, shall not be applicable.

(2) Section 56(g)(4)(D)(ii) of the Internal Revenue Code is modified to specify that Sections 24364 and 24407 shall not apply to expenditures paid or incurred in taxable years beginning on or after January 1, 1990.

(3) With respect to corporations that are not subject to the tax imposed under Chapter 2 (commencing with Section 23101), the amount of interest income included in the adjusted current earnings shall not exceed the amount of interest income included for purposes of the regular tax.

(4) Appropriate adjustments shall be made to limit deductions from adjusted current earnings for interest expense in accordance with the provisions of Sections 24344 and 24425.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 79. (SB 711) Effective October 1, 2025.)


text: Section 56A of the Internal Revenue Code, relating to adjusted financial statement income, shall not apply.

history: (History: Repealed and added by Stats. 2025, Ch. 231, Sec. 82. (SB 711) Effective October 1, 2025.)


text:
For purposes of this part, Section 57 of the Internal Revenue Code is modified as follows:

(a) Section 57(a)(5) of the Internal Revenue Code, relating to tax-exempt interest, shall not be applicable.

(b) Section 57(a)(6) of the Internal Revenue Code, relating to accelerated depreciation or amortization on certain property placed in service before January 1, 1987, is modified to read: With respect to each property as described in Section 1250(c) of the Internal Revenue Code as that provision read on April 1, 1970, the amount by which the deduction allowable for the taxable year for exhaustion, wear, tear, obsolescence, or amortization exceeds the depreciation deduction that would have been allowable for the taxable year, had the taxpayer depreciated the property under the straight line method for each taxable year of its useful life (determined without regard to Section 24354.2 or 24381) for which the taxpayer has held the property.

history: (History: Amended by Stats. 2002, Ch. 488, Sec. 8.5. Effective September 12, 2002.)


text:
For purposes of this part, the provisions of Section 59 of the Internal Revenue Code are modified as follows:

(a) Section 59(a) of the Internal Revenue Code, relating to the alternative minimum tax foreign tax credit, shall not be applicable.

(b) Section 59(b) of the Internal Revenue Code, relating to income eligible for the credit under Section 936 of the Internal Revenue Code, shall not be applicable.

(c) Subparagraphs (A), (B), and (C) of Section 59(e)(2) of the Internal Revenue Code, relating to qualified expenditures, are modified to refer to:

(1) Section 24364, in lieu of the deduction under Section 173 of the Internal Revenue Code.

(2) Section 24423, in lieu of the deduction under Section 263(c) of the Internal Revenue Code.

history: (History: Amended by Stats. 1991, Ch. 117, Sec. 50. Effective July 16, 1991.)


text:
(a) There shall be imposed upon every corporation, other than a bank, for each taxable year, a tax at the rate of 7.6 percent upon its net income derived from sources within this state on or after January 1, 1937, other than income for any period for which the corporation is subject to taxation under Chapter 2 (commencing with Section 23101), according to or measured by its net income.

(b) For calendar or fiscal years ending after June 30, 1973, the rate of tax shall be 9 percent instead of 7.6 percent as provided by subdivision (a).

(c) For calendar or fiscal years ending after December 31, 1979, the rate of tax shall be the rate specified for those years by Section 23151.

history: (History: Amended by Stats. 1997, Ch. 605, Sec. 73. Effective January 1, 1998.)

chapter: 3. The Corporation Income Tax

article: 1. Imposition of Tax

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 3. The Corporation Income Tax > 1. Imposition of Tax


text: There shall be offset against the tax hereby imposed for any period the amount of any tax imposed on the taxpayer under Chapter 2 for the same period. In the event that taxes, interest and penalties have been or shall be assessed against, paid by or collected from a taxpayer under this chapter, which assessment, payment or collection should have been made under Chapter 2, such taxes, interest and penalties shall be considered as having been assessed, paid or collected under Chapter 2 as of the date or dates they were made.

history: (History: Added by Stats. 1949, Ch. 557.)

article: 1. Imposition of Tax


text: Where a corporation formerly subject to tax under Chapter 2 (commencing with Section 23101) becomes subject to tax under Chapter 3 (commencing with Section 23501), the tax for the year in which the change occurs will be assessed under Chapter 2 (commencing with Section 23101) and not under Chapter 3 (commencing with Section 23501). For years subsequent to the year in which the change occurs, the tax will be assessed under Chapter 3 (commencing with Section 23501).

history: (History: Amended by Stats. 1971, Ch. 1304.)

article: 1. Imposition of Tax


text: No decree of dissolution shall be made and entered by any court, nor shall the county clerk of any county or the Secretary of State file any such decree, or file any other document by which the term of existence of any taxpayer shall be reduced or terminated, nor shall the Secretary of State file any certificate of the surrender by a foreign corporation of its right to do intrastate business in this State if the corporate powers, rights, and privileges of the corporation have been suspended or forfeited by the Franchise Tax Board for failure to pay the tax, penalties, or interest due under this part or Part 10.2 (commencing with Section 18401).

history: (History: Amended by Stats. 2006, Ch. 773, Sec. 58. Effective September 29, 2006.)

article: 2. Cessation of Activities

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 3. The Corporation Income Tax > 2. Cessation of Activities


text:
(a) In the case of a taxpayer who transports any agricultural product donated in accordance with Chapter 5 (commencing with Section 58501) of Part 1 of Division 21 of the Food and Agricultural Code, for taxable years beginning on or after January 1, 1996, there shall be allowed as a credit against the “tax” (as defined by Section 23036), an amount equal to 50 percent of the transportation costs paid or incurred by the taxpayer in connection with the transportation of that donated agricultural product.

(b) If two or more taxpayers share in the expenses eligible for the credit provided by this section, each taxpayer shall be eligible to receive the tax credit in proportion to its respective share of the expenses paid or incurred.

(c) If any credit allowed by this section is claimed by the taxpayer, any deduction otherwise allowed under this part for that amount of the cost paid or incurred by the taxpayer which is eligible for the credit that is claimed shall be reduced by the amount of the credit allowed.

(d) Upon delivery of the donated agricultural product by a taxpayer authorized to claim a credit pursuant to subdivision (a), the nonprofit charitable organization shall provide a certificate to the taxpayer who transported the agricultural product. The certificate shall contain a statement signed and dated by a person authorized by that organization that the product is donated under Chapter 5 (commencing with Section 58501) of Part 1 of Division 21 of the Food and Agricultural Code. The certificate shall also contain the following information: the type and quantity of product donated, the distance transported, the name of the transporter, the name of the taxpayer donor, and the name and address of the donee. Upon the request of the Franchise Tax Board, the taxpayer shall provide a copy of the certification to the Franchise Tax Board.

(e) In the case where any credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding years if necessary, until the credit is exhausted.

history: (History: Amended by Stats. 2000, Ch. 862, Sec. 68. Effective January 1, 2001.)

chapter: 3.5. Tax Credits

path: 2. OTHER TAXES > 11. CORPORATION TAX LAW > 3.5. Tax Credits


text:
For each taxable year beginning on or after January 1, 1987, there shall be allowed as a credit against the “tax” (as defined by Section 23036) an amount determined in accordance with Section 41 of the Internal Revenue Code, relating to credit for increasing research activities, except as follows:

(a) For each taxable year beginning before January 1, 1997, both of the following modifications shall apply:

(1) The reference to “20 percent” in Section 41(a)(1) of the Internal Revenue Code is modified to read “8 percent.”

(2) The reference to “20 percent” in Section 41(a)(2) of the Internal Revenue Code is modified to read “12 percent.”

(b) (1) For each taxable year beginning on or after January 1, 1997, and before January 1, 1999, both of the following modifications shall apply:

(A) The reference to “20 percent” in Section 41(a)(1) of the Internal Revenue Code is modified to read “11 percent.”

(B) The reference to “20 percent” in Section 41(a)(2) of the Internal Revenue Code is modified to read “24 percent.”

(2) For each taxable year beginning on or after January 1, 1999, and before January 1, 2000, both of the following shall apply:

(A) The reference to “20 percent” in Section 41(a)(1) of the Internal Revenue Code is modified to read “12 percent.”

(B) The reference to “20 percent” in Section 41(a)(2) of the Internal Revenue Code is modified to read “24 percent.”

(3) For each taxable year beginning on or after January 1, 2000, both of the following shall apply:

(A) The reference to “20 percent” in Section 41(a)(1) of the Internal Revenue Code is modified to read “15 percent.”

(B) The reference to “20 percent” in Section 41(a)(2) of the Internal Revenue Code is modified to read “24 percent.”

(c) (1) With respect to any expense paid or incurred after the operative date of Section 6378, Section 41(b)(1) of the Internal Revenue Code, relating to qualified research expenses, is modified to exclude from the definition of “qualified research expense” any amount paid or incurred for tangible personal property that is eligible for the exemption from sales or use tax provided by Section 6378.

(2) “Qualified research” and “basic research” shall include only research conducted in California.

(d) The provisions of Section 41(e)(7)(A) of the Internal Revenue Code, shall be modified so that “basic research,” for purposes of this section, includes any basic or applied research including scientific inquiry or original investigation for the advancement of scientific or engineering knowledge or the improved effectiveness of commercial products, except that the term does not include any of the following:

(1) Basic research conducted outside California.

(2) Basic research in the social sciences, arts, or humanities.

(3) Basic research for the purpose of improving a commercial product if the improvements relate to style, taste, cosmetic, or seasonal design factors.

(4) Any expenditure paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas).

(e) (1) In the case of a taxpayer engaged in any biopharmaceutical research activities that are described in codes 2833 to 2836, inclusive, or any research activities that are described in codes 3826, 3829, or 3841 to 3845, inclusive, of the Standard Industrial Classification (SIC) Manual published by the United States Office of Management and Budget, 1987 edition, or any other biotechnology research and development activities, the provisions of Section 41(e)(6) of the Internal Revenue Code shall be modified to include both of the following:

(A) A qualified organization as described in Section 170(b)(1)(A)(iii) of the Internal Revenue Code and owned by an institution of higher education as described in Section 3304(f) of the Internal Revenue Code.

(B) A charitable research hospital owned by an organization that is described in Section 501(c)(3) of the Internal Revenue Code, is exempt from taxation under Section 501(a) of the Internal Revenue Code, is not a private foundation, is designated a “specialized laboratory cancer center,” and has received Clinical Cancer Research Center status from the National Cancer Institute.

(2) For purposes of this subdivision:

(A) “Biopharmaceutical research activities” means those activities that use organisms or materials derived from organisms, and their cellular, subcellular, or molecular components, in order to provide pharmaceutical products for human or animal therapeutics and diagnostics. Biopharmaceutical activities make use of living organisms to make commercial products, as opposed to pharmaceutical activities that make use of chemical compounds to produce commercial products.

(B) “Other biotechnology research and development activities” means research and development activities consisting of the application of recombinant DNA technology to produce commercial products, as well as research and development activities regarding pharmaceutical delivery systems designed to provide a measure of control over the rate, duration, and site of pharmaceutical delivery.

(f) In the case where the credit allowed by this section exceeds the “tax,” the excess may be carried over to reduce the “tax” in the following year, and succeeding years if necessary, until the credit has been exhausted.

(g) For each taxable year beginning on or after January 1, 1998, the reference to “Section 501(a)” in Section 41(b)(3)(C)(ii)(I) of the Internal Revenue Code, relating to qualified research consortium, is modified to read “this part or Part 10 (commencing with Section 17001).”

(h) (1) (A) For each taxable year beginning on or after January 1, 2000, and before January 1, 2025, the election of alternative incremental credit under Section 41(c)(4) of the Internal Revenue Code, as applicable for state purposes, shall apply as that section was in effect on January 1, 2015, and as modified as follows:

(i) The reference to “3 percent” in Section 41(c)(4)(A)(i) of the Internal Revenue Code is modified to read “one and forty-nine hundredths of one percent.”

(ii) The reference to “4 percent” in Section 41(c)(4)(A)(ii) of the Internal Revenue Code is modified to read “one and ninety-eight hundredths of one percent.”

(iii) The reference to “5 percent” in Section 41(c)(4)(A)(iii) of the Internal Revenue Code is modified to read “two and forty-eight hundredths of one percent.”

(B) Section 41(c)(4)(B) of the Internal Revenue Code shall not apply and in lieu thereof an election under Section 41(c)(4)(A) of the Internal Revenue Code may be made for any taxable year of the taxpayer beginning on or after January 1, 1998, and before January 1, 2025. That election shall apply to the taxable year for which made and all succeeding taxable years beginning before January 1, 2025, unless revoked with the consent of the Franchise Tax Board.

(2) (A) For taxable years beginning on or after January 1, 2025, Section 41(c)(4) of the Internal Revenue Code, relating to election of the alternative simplified credit, shall apply, and is modified as follows:

(i) The reference to “14 percent” in Section 41(c)(4)(A) of the Internal Revenue Code is modified to read “3 percent.”

(ii) The reference to “6 percent” in Section 41(c)(4)(B)(ii) of the Internal Revenue Code is modified to read “1.3 percent.”

(B) Section 41(c)(4)(C) of the Internal Revenue Code shall not apply and in lieu thereof an election under Section 41(c)(4)(A) of the Internal Revenue Code may be made for any taxable year of the taxpayer beginning on or after January 1, 2024. That election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Franchise Tax Board.

(i) Section 41(c)(6) of the Internal Revenue Code, relating to gross receipts, is modified to take into account only those gross receipts from the sale of property held primarily for sale to customers in the ordinary course of the taxpayer’s trade or business that is delivered or shipped to a purchaser within this state, regardless of f.o.b. point or any other condition of the sale.

(j) Section 41(h) of the Internal Revenue Code, relating to treatment of credit for qualified small businesses, shall not apply.

(k) Section 41(g) of the Internal Revenue Code, relating to special rule for passthrough of credit, is modified by each of the following:

(1) The last sentence shall not apply.

(2) If the amount determined under Section 41(a) of the Internal Revenue Code for any taxable year exceeds the limitation of Section 41(g) of the Internal Revenue Code, that amount may be carried over to other taxable years under the rules of subdivision (f), except that the limitation of Section 41(g) of the Internal Revenue Code shall be taken into account in each subsequent taxable year.

(l) Section 41(a)(3) of the Internal Revenue Code shall not apply.

(m) Section 41(b)(3)(D) of the Internal Revenue Code, relating to amounts paid to eligible small businesses, universities, and federal laboratories, shall not apply.

(n) Section 41(f)(6) of the Internal Revenue Code, relating to energy research consortium, shall not apply.

history: (History: Amended by Stats. 2025, Ch. 231, Sec. 83. (SB 711) Effective October 1, 2025.)


text: It is the intent of the Legislature that the amount of the state low-income housing tax credit allocated to a project pursuant to Section 23610.5 shall not exceed an amount in addition to the federal tax credit that is necessary for the financial feasibility of the project and its viability throughout the extended use period.

history: (History: Amended (as added by Stats. 1990, Ch. 166) by Stats. 1990, Ch. 1349, Sec. 19.3. Effective September 26, 1990.)