Income taxes: minimum franchise tax: annual tax: deductions: exemptions.

The Personal Income Tax Law allows various deductions in computing the income that is subject to the tax imposed by that law. This bill would allow, for taxable years beginning on or after January 1, 2015, as a deduction any income earned or received by a taxpayer that is attributable to a taxpayer's status as a partner in or sole proprietor of a qualified business, as defined, for the first 5 consecutive taxable years in which the business is a qualified business. Existing law generally imposes a minimum franchise tax of $800, except as provided, on every corporation incorporated in this state, qualified to transact intrastate business in this state, or doing business in this state, and an annual tax in an amount equal to the minimum franchise tax on every limited partnership, limited liability partnership, and limited liability company registered, qualified to transact business, or doing business in this state, as specified. Existing law requires every limited liability company subject to the annual tax to pay annually to this state a fee equal to specified amounts based upon total income from all sources reportable to this state. This bill would exempt from the minimum franchise tax every corporation incorporated in this state on or after January 1, 2015, for the first 5 consecutive taxable years during which the corporation does business within this state. This bill would also exempt from the annual tax every limited partnership, limited liability partnership, and limited liability company that files a specified form with the Secretary of State on or after January 1, 2015, as specified, for the first 5 consecutive taxable years during the time that entity does business within the state. This bill would additionally exempt a limited liability company that files a specified form with the Secretary of State on or after January 1, 2015, from the fee equal to specified amounts for the first 5 consecutive taxable years that the limited liability company does business within this state. The Corporation Tax Law, in modified conformity with federal income tax laws, exempts various types of organizations from state income taxes imposed by that law. This bill would exempt a corporation that incorporates under the laws of this state on or after January 1, 2015, for the first 5 consecutive taxable years that it does business within this state. Under existing law, a corporation that is a small business solely owned by a deployed member of the United States Armed Forces is not subject to the minimum franchise tax when the owner is deployed and the corporation meets certain requirements. Existing law makes these provisions inoperative for taxable years beginning on or after January 1, 2018. This bill would instead make these provisions inoperative for taxable years beginning on or after January 1, 2019. This bill would take effect immediately as a tax levy.