EXAMPLE 1: Corporation B, a calendar year taxpayer that is a general corporation incorporated in this state, ceases all business activities on December 22, 2000. On December 29, 2000, B submits to the Secretary of State dissolution documents conforming with the Corporations Code and a request for a tax clearance certificate based on taxes already paid, whereupon the Secretary of State files the Certificate of Dissolution and grants B a dissolution conditioned on the Franchise Tax Board issuing a tax clearance certificate. The Secretary of State forwards the request for a tax clearance certificate to the Franchise Tax Board on January 3, 2001. On January 29, 2001, the Franchise Tax Board informs B that, as conditions precedent to receiving a tax clearance certificate, B must file a final tax return and pay the franchise tax for the 2000 taxable year. B files the final return and pays the franchise tax on March 1, 2001. The Franchise Tax Board audits the returns for all outstanding taxable years, including the final return, and then issues the tax clearance certificate, sending a copy to the Secretary of State. The dissolution will then become final as of December 29, 2000, the date the documents were filed with the Secretary of State. Pursuant to Revenue and Taxation Code section 23332, B will not be subject to the minimum franchise tax for the 2001 taxable year because B has met each of the requirements of that section by ceasing all business activities and filing the dissolution papers before commencement of the 2001 taxable year.
EXAMPLE 2: Assume the same facts as in EXAMPLE 1, except that B does not file the final return and pay the franchise tax for 2000 on March 1, 2001. On January 3, 2002, the Franchise Tax Board suspends B pursuant to Revenue and Taxation Code section 23301. On February 13, 2002, B files a final return but the Franchise Tax Board is unable to issue a final tax clearance certificate because B is suspended.
EXAMPLE 3: Corporation C, a domestic general corporation, is in the process of merging with Corporation D, another domestic general corporation, where D will be the surviving corporation. C and D have agreed to the terms of the merger and file merger documents with the Secretary of State. The Secretary of State will file the merger documents without receiving a tax clearance certificate for C from the Franchise Tax Board. The Secretary of State will inform the Franchise Tax Board of the merger and termination of C's existence.
EXAMPLE 4: Assume the same facts as in EXAMPLE 3, except Corporation D, the surviving corporation, is a foreign general corporation not qualified to transact intrastate business. To effectuate the merger D is required to follow the laws of the jurisdiction under which it is incorporated. However, D is required to submit the required merger documents to the Secretary of State and C must obtain a tax clearance certificate from the Franchise Tax Board before the Secretary of State will file the merger documents.
Cal. Code Regs. Tit. 18, § 23334
2. Amendment of section heading, section and NOTE filed 1-9-2003; operative 2-8-2003 (Register 2003, No. 2).
Note: Authority cited: Section 19503, Revenue and Taxation Code. Reference: Sections 23332 and 23334, Revenue and Taxation Code.
2. Amendment of section heading, section andNotefiled 1-9-2003; operative 2-8-2003 (Register 2003, No. 2).