General Corporations Tax

Division 2, Part 11, Chapter 2, Article 2 of the Revenue and Taxation Code deals with tax on general corporations.

Section 23151 provides that, with the exception of banks and financial corporations, every corporation doing business within the limits of this state and not expressly exempted from taxation by the provisions of the Constitution of this state or by this part, is required to annually pay to the state, for the privilege of exercising its corporate franchises within this state, a tax according to or measured by its net income, to be computed at a specified rate upon the basis of its net income for the next preceding income year, or if greater, the minimum tax specified.

Since January 1, 2000, the tax imposed under this section is a tax according to or measured by net income, to be computed at the rate of 8.84 percent upon the basis of the net income for that taxable year, but not less than the minimum tax specified in Section 23153.

Section 23151.1 specifies that every corporation (except banks and financial corporations) doing business within the limits of this state and not exempted from taxation by the provisions of the Constitution of this state or by this part, must annually pay to the state for the privilege of conducting business in this state.

Section 23151.2 requires every corporation (except banks and financial corporations) not exempted from taxation by the provisions of the Constitution of this state or by this part which dissolves or withdraws, to 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, unless that income has previously been included in the measure of tax for any taxable year.

Section 23153 requires every specified corporation is subject to the minimum franchise tax from the earlier of the date of incorporation, qualification, or commencing to do business within this state, until the effective date of dissolution or withdrawal.

Section 23154 states that the tax imposed under this chapter is in lieu of all ad valorem taxes and assessments of every kind and nature upon the general corporate franchises of the corporations taxable under this chapter, but is not in lieu of any taxes or assessments upon real property interests not otherwise exempted from taxation or assessment, that are created by special franchises owned, held, or used by those corporations

All those real property interests, not otherwise exempted from taxation or assessment that are created by those special franchises, are to be assessed annually by the State Board of Equalization, at their actual value, in the same manner as is provided for the assessment of other property to be assessed by that board under Section 19 of Article XIII of the California Constitution.

The real property is subject to taxation to the same extent and in the same manner as other property assessed under that constitutional provision by the board. For purposes of assessing a real property interest pursuant to the preceding sentence, the value of intangible assets or rights are not enhance or be reflected in the value of that real property interest, except that the real property interest may be assessed and valued by assuming the presence of intangible assets and rights necessary to put the real property interest to beneficial or productive use.

Section 23156 requires the FTB to abate, upon written request by a qualified nonprofit corporation, unpaid qualified taxes, interest, and penalties for the taxable years in which the qualified nonprofit corporation certifies, under penalty of perjury, that it was not doing business. The terms “qualified nonprofit corporation” and “qualified taxes, interest, and penalties” are defined.