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Focus on State & Local Taxation: Delaware Franchise Tax May be Reduced by Using Alternative Calculation

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Corporations formed in Delaware, regardless of where headquartered or operating, are subject to an annual franchise tax for the privilege of being incorporated in the state.
January 28, 2015

Corporations formed in Delaware, regardless of where headquartered or operating, are subject to an annual franchise tax for the privilege of being incorporated in the state. This tax is required to keep the corporation in good status and is simply based on incorporation status.

Delaware corporations are required to file an annual report and pay their related taxes by March 1, 2015. With a maximum tax that has increased from $165,000 to $180,000 for the 2014 tax year, it is important to know your options for calculating the franchise tax liability. The methods for calculating the tax can have very different outcomes and using an alternative method may lower the amount of tax owed. Quarterly estimates are also required for corporations with a liability of over $5,000.

Contact your RubinBrown advisor today if you need help with your franchise tax calculations, filing your annual report or want to discuss the Delaware franchise tax implications of issuing new shares of stock.

 

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

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