MyFTB accountAll About Business May 2018 Tax News
What is the 15-Day Rule?
In short, the 15-day rule is a set of provisions within the California law (Revenue and Taxation Code Sections 17936, 17946, 17948.2, and 23114) that operate to provide relief to business entities (limited partnerships, limited liability partnerships, limited liability companies, and corporations) from the general requirement to pay the annual/minimum tax.
A business entity is not subject to the $800 annual/minimum tax if the entity:
- Did not conduct business in the state during the tax year, and
- The tax year was 15 days or less.
The short tax year of 15 days or less rule is explained in FTB Publication 1060, Guide for Corporations Starting Business in California. Also, for more information see our November 2012 and February 2015 Tax News issues.
When it comes to corporations, if the business qualifies for the short-year 15-day rule, this period of time will also be disregarded for purposes of determining the corporation’s first year minimum tax waiver.