Discussion:Calif Corp - Want to file final 2008 but already paid 2009 Min Tax
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Discussion Forum Index --> Tax Questions --> Calif Corp - Want to file final 2008 but already paid 2009 Min Tax
Laketahoecpa (talk|edits) said: | 8 September 2009 |
| I have a client who formed S corp couple of years ago. It has been inactive since inception. No activity returns have been filed to pay the $800 Calif minimum tax.
Client has decided finally that he's doesn't want the corp. I'd like to file a final return for 2008 but I'm afraid it will be a problem getting back the $800 minimum tax for 2009 that he paid in April. Will Franchise Tax Board automatically refund the 2009 payment when they receive the 2008 final return or is it going to take letters/phone calls to resolve? Anyone have experience with this? | |
| September 8, 2009 | |
| Was the corp dissolved with the State of CA by 12/31/08? If not, I believe a 2009 return will still be required, with the requisite $ 800 minimum liability.
And I would suggest starting the dissolution NOW, just to make sure it's a done deal before 12/31/09. The wheels in CA don't move quickly. | |
Laketahoecpa (talk|edits) said: | 8 September 2009 |
| California actually eased up on that. Can file final return as long as corp is dissolved within a year of filing the final return. So if I file the 2008 return on Sept 15, 2009 and mark it final, the corp has to be dissovled by September 15, 2010. | |
| 8 September 2009 | |
| The deadline for filing the certificate of dissolution with the Secretary of State was January 15, 2009. Consequently, the $800 paid for 2009 will not be refundable if the certificate was filed after that date. | |
Laketahoecpa (talk|edits) said: | 8 September 2009 |
| I disagree. According to Spidell's Analysis and Explanation of California Taxes, for taxable years beginning on or after January 1, 2006, the FTB will not assess the $800 minimum franchise tax if:
1) The entity files a timely final tax return on or before the extended due date for the preceding taxable year; 2) The entity does not do business in California after the end of that year; and 3) The entity files a Certificate of Dissolution, Certificate of Surrender, or Certificate of Cancellation with the Secretary of State before the end of the 12-month period beginning with the date the final return was filed. So my 2008 final return will be honored and the $800 tax will not be assessed for 2009 as long as a Certificate of Dissolution is filed before September 2010. | |
| 8 September 2009 | |
| Agreed. Missed the part about the corporation not conducting business. | |
| September 8, 2009 | |
| Thanks LT, good info. I wasn't aware CA had lightened up on inactive corps. | |
Laketahoecpa (talk|edits) said: | 9 September 2009 |
| That is a good question and one thing I'm worried about. The client pays the state tax out of his personal account. Never set up a corporate account because he never used the corporation. I'm afraid the refund check (if there is one) will be made out to the corporation and he's going to have a hard time depositing it. | |
| 9 September 2009 | |
| He's an officer of the corporation, isn't he? On behalf of the corp he endorses it over to himself and deposits it in his personal account. Shouldn't be a problem.
If the bank gets really snarky about it he can open an account for the corp, deposit the check, write a check to himself and close the account. Cost the bank a bunch to process all that stuff. Explain that to the bank and they'll probably say just endorse the check to yourself and be done with it. | |
| 9 September 2009 | |
| If already dissolved, TP might have a difficult time finding a bank to open an account. If it isn't dissolved yet, TP should open a bank account. A free savings acct.
If that isn't possible, could he set up a sole proprietor dba with the county using the name, without "inc." of course? Then use that to open an account long enough to cash the check. I don't think that is illegal. I had a client that closed the corp, and immediately closed his checking acct. When the $800 state refund check came, he was s.o.l. His bank wouldn't let him cash the check or reopen the account. I don't know what eventually happened. | |
| 9 September 2009 | |
| Agree with KatieJ. However, some banks will not allow the corporation to endorse the check over to the shareholder. | |
Laketahoecpa (talk|edits) said: | 9 September 2009 |
| Thanks Katie.
On the occassion that I have had a check endorsed over to me and I think the bank will probably question it, I deposit with group of checks and do it via ATM. | |
| 14 September 2009 | |
| Ah, the stealth approach <G>. Won't work if the clerk who processes the deposit has sharp eyes, perhaps.
I'm assuming, based on your earlier posts, that the corporation has not yet been formally dissolved. So the client can open a bank account for it. That seems like overkill, but it may be the simplest solution in the long run. | |
