How Do I Apply For Tax exemption?

Does the CA Franchise Tax Board's exemption for first year corporations on the Annual Min Tax apply to foreign corps converting to a CA Corp?

• If someone is converting a foreign corporation to a CA corporation (done with Articles of Incorporation that include a conversion statement), as opposed to simply dissolve the corp in another state and forming an new entity in CA, would the FTB still offer the first year exemption? Or does the FTB see the converted entity as “not new” and therefore subject in its first year to the min tax?

• Answer:

  The answer to this question turns on whether the corporation has done any business in California while it is a foreign corporation. Foreign corporations doing business in California are subject to the minimum franchise tax, and California does not make the exemption available to corporations that reorganize as California corporations where the intent is to avoid the minimum tax. If the corporation has not done business in California as a foreign corporation and converts before doing any business in California, then I believe the exemption would apply.