California Form 100S: Filing Requirements, Deadlines, and Penalties

Every S corporation incorporated in California, registered with the Secretary of State, doing business in the state, or earning California-source income must meet the California Form 100S filing requirements each year, even in a loss year.{¹} The return is due on the 15th day of the third month after the close of the tax year (March 15 for calendar-year filers), carries an $800 annual minimum franchise tax, and imposes a 1.5% entity-level tax on California net income on top of the pass-through treatment shareholders get federally.{²}

Who Has to File

A valid federal S election plus any one of the following triggers a California filing obligation:

Incorporation in California.
Registration or qualification with the California Secretary of State.
Doing business in California, meaning any transaction for financial gain in the state or crossing the annual sales, property, or payroll thresholds.
Receiving California-source income, even without a physical presence.{}¹

The “doing business” test catches more companies than most owners expect. For 2025, the corporation is doing business in California if California sales exceed $757,070, or if California property or payroll exceeds $75,707. Either the dollar figure or 25% of the company’s total in that category triggers the requirement, whichever is lower.{³} The thresholds adjust annually.

What You Owe

California charges S corporations the greater of two amounts: an $800 annual minimum franchise tax, or 1.5% of California net income.{⁴} You pay one number, not both stacked together. Once California net income clears roughly $53,334, the 1.5% figure becomes larger than $800 and becomes the tax due. Below that, you owe the $800 floor.

The $800 minimum applies whether the corporation made money, lost money, or sat inactive. It’s due by the 15th day of the fourth month of the tax year (April 15 for calendar-year filers).

Two exceptions exist. Newly incorporated or newly qualified S corporations pay no minimum franchise tax in their first taxable year, though Form 100S must still be filed. The waiver also applies if the corporation did no business in California during a taxable year of 15 days or fewer.{¹} After year one, the $800 applies every year the entity exists.

When to File

Form 100S is due on the 15th day of the third month after the close of the tax year. For calendar-year filers, that’s March 15, matching the federal Form 1120-S deadline.{⁵}

California grants an automatic six-month extension to September 15 without a written request. Form 3539 is only required if you owe tax and are not paying electronically; if no tax is due, the extension is automatic and you simply file by the extended deadline.{⁶} The extension covers only the return, not payment. Tax owed, including the minimum franchise tax and estimated income tax, must still be paid by the original March 15 due date, or penalties and interest run from that date.

California requires any business entity that prepares its return using tax preparation software to e-file.{⁷} That covers virtually every S corporation using a preparer or commercial software. Paper filing is reserved for returns done entirely by hand.

Quarterly Estimated Tax Payments

An S corporation expecting total tax liability of $500 or more must make quarterly estimated payments on Form 100-ES. The installments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year (April 15, June 15, September 15, and December 15 for calendar-year filers).{⁸}

The full $800 minimum franchise tax must be paid with the first installment, not spread across the four. The remaining installments cover estimated 1.5% income tax. Filers usually rely on the prior-year safe harbor (paying at least last year’s total tax, provided last year’s tax was not zero) or the annualized income method for businesses with uneven earnings.

Required Schedules and Attachments

Form 100S starts with the numbers on your completed federal Form 1120-S. Information transfers from federal Form 1120-S, Page 1, to Schedule F on Form 100S, and a copy of the federal return with all supporting schedules must be attached.{⁴} Finalize the 1120-S first; errors carry over.

California-specific schedules to attach:

Schedule K-1 (100S), one per shareholder, with separate columns for federal amounts, California adjustments, total California-law amounts, and California-source amounts.{}⁹
Schedule B (100S) for depreciation and amortization under California rules.{}¹⁰
Schedule R, required if the corporation has income both inside and outside California, to apportion business income.{}¹¹
Schedule D-100S if the corporation had capital gains or losses during the year.

California uses a single-sales factor apportionment formula for most businesses. Sales are generally sourced to the market where the customer receives the benefit.{¹¹} Tracking customer location is the most important data step for multi-state S corporations.

California Adjustments From Federal Law

Reconciling federal taxable income to California taxable income is the substantive work on Form 100S. California conforms to parts of the Internal Revenue Code but departs on several items that usually push California taxable income higher, especially in the early years of holding depreciable assets.

Section 179 Expense

California’s Section 179 limit is $25,000, with a phase-out beginning at $200,000. Federal law for 2025 allows immediate expensing of up to $2,500,000 with a phase-out starting at $4,000,000.{¹²} An S corporation taking a large federal Section 179 deduction adds back the difference on the California return and depreciates the excess over the asset’s useful life under California rules. This is one of the most common and largest adjustments on the return.

Bonus Depreciation

California does not conform to federal bonus depreciation under IRC Section 168(k).{¹³} The full bonus amount is added back for California purposes, and the asset is then depreciated under California’s standard rules, which generally follow the Alternative Depreciation System with longer recovery periods than federal MACRS.

Other Common Differences

California generally does not allow net operating loss carrybacks, treats certain small business stock gains differently, and diverges on like-kind exchanges involving out-of-state property. Each difference produces an addition or subtraction that flows through to Schedule K-1 (100S).

Built-In Gains and Excess Passive Income

Corporations that converted from a C corporation face two additional taxes at California’s 8.84% corporate rate.

The built-in gains tax hits gains that existed at the time of the S election when the corresponding assets are sold. This is where a costly mistake happens often. The federal recognition period is five years under IRC Section 1374(d)(7).{¹⁴} California does not conform to that reduction. California’s recognition period is 10 years (120 months) from the first day the corporation became an S corporation.{¹⁵} An asset sold in year six or seven, thought to be past the federal window, can still generate a California tax bill. Track asset basis and fair market value at the S election date for the full 10 years.

The excess net passive income tax applies to an S corporation carrying over accumulated earnings and profits from C corporation years, if passive investment income (interest, dividends, rents, royalties, annuities) exceeds 25% of gross receipts.{¹⁶} Distributing the accumulated C corporation earnings eliminates the trigger.

Shareholder Credit for the Entity-Level Tax

Because California taxes S corporation income at both the entity level and again on the shareholder’s personal return, shareholders can claim a credit for their share of the 1.5% tax paid by the corporation. The credit appears on Schedule K-1 (100S) and applies on the shareholder’s personal return.

The credit is limited. The $800 minimum franchise tax, the built-in gains tax, and the excess net passive income tax are all ineligible.{⁴} Only the net income tax at the 1.5% rate generates a shareholder credit. A corporation paying exactly the $800 minimum produces no shareholder credit at all.

The Optional Pass-Through Entity Elective Tax

California offers S corporations an optional entity-level tax that can deliver a federal tax benefit for shareholders. Under the pass-through entity (PTE) elective tax, the corporation pays 9.3% of qualified net income to the FTB, and each qualifying shareholder receives a corresponding nonrefundable credit on their California personal return.{¹⁷}

The federal side is where the benefit sits. The PTE payment is deductible as a business expense on the S corporation’s federal return, sidestepping the $10,000 individual state and local tax deduction cap. For shareholders in higher brackets, the federal savings can outweigh the cost of the election. Unused PTE credits carry forward up to five years.

For taxable years beginning on or after January 1, 2026, the corporation files FTB 3804 with a timely return and makes an initial payment by June 15 of the election year. Missing or underpaying the June 15 installment doesn’t end the election, but each qualifying shareholder’s credit is reduced by 12.5% of their share of the shortfall.{¹⁷} Payments run through the FTB’s Web Pay portal or voucher FTB 3893. The election is available through 2030.

Penalties

Two separate penalties can stack.

Filing Form 100S late or filing an incomplete return costs $18 per shareholder for each month or partial month, up to 12 months.{¹⁸} A five-shareholder S corporation four months late owes $360 ($18 × 5 × 4). A separate delinquent filing penalty of 5% of unpaid tax per month, capped at 25%, also applies when tax remains unpaid at filing. Both penalties can run at the same time. Reasonable cause is the only defense.

Underpaying or missing an estimated installment triggers an interest-based penalty on the shortfall for each quarter. The rate is 7% for the period from July 1, 2025, through June 30, 2026.{¹⁹} It runs from the installment due date until the payment date or the return due date, whichever comes first.

Filing the Final Return When Dissolving

Wind-down doesn’t end the filing obligation on the last day of business. The corporation files a final Form 100S covering the short year through the date operations ceased, marks the “Final Return” box on page one, and writes “FINAL” at the top.{²⁰} All outstanding tax, penalties, fees, and interest must be paid, and any delinquent prior-year returns filed, before the FTB will close the account. Within 12 months of filing the final return, the corporation files dissolution documents with the Secretary of State, such as the Certificate of Dissolution (Form DISS STK) or Short Form Certificate of Dissolution (Form DSF STK).

Timing matters. The corporation can avoid the minimum franchise tax for the current and later taxable years if it files the final return on time (including extension), ceases doing business in California after the last day of the preceding taxable year, and files dissolution documents with the Secretary of State within 12 months.{²⁰} Miss any of these and the $800 keeps accruing. If the FTB has already suspended or forfeited the entity, a Certificate of Revivor and payment of all outstanding amounts come first before the Secretary of State will accept dissolution paperwork.

1
Franchise Tax Board. S Corporations
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Franchise Tax Board. Doing Business in California
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Franchise Tax Board. 2024 Instructions for Form 100S S Corporation Tax Booklet
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Franchise Tax Board. Due Dates – Businesses
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California Franchise Tax Board. 2024 Form 3539 Payment for Automatic Extension for Corporations and Exempt Organizations
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Franchise Tax Board. 2025 Instructions for Form 100 Corporation Tax Booklet
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California Franchise Tax Board. Estimate Business Taxes and Prepayments
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Franchise Tax Board. 2024 Shareholders Instructions for Schedule K-1 (100S)
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Franchise Tax Board. 2022 California Schedule B (100S) S Corporation Depreciation and Amortization
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Franchise Tax Board. 2025 Instructions for Schedule R Apportionment and Allocation of Income
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Internal Revenue Service. Instructions for Form 4562
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Franchise Tax Board. SB711 Bill Analysis – Conformity Act of 2025
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Office of the Law Revision Counsel. 26 U.S. Code 1374 – Tax Imposed on Certain Built-in Gains
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California Franchise Tax Board. S Corporation Manual – Chapter 5
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Office of the Law Revision Counsel. 26 USC 1375 – Tax Imposed When Passive Investment Income of Corporation Having Accumulated Earnings and Profits Exceeds 25 Percent of Gross Receipts
17
Franchise Tax Board. Pass-Through Entity (PTE) Elective Tax
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Franchise Tax Board. FTB 1024 Penalty Reference Chart
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Franchise Tax Board. Interest and Estimate Penalty Rates
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Franchise Tax Board. FTB Publication 1038