California Form 100S: Filing, Deadlines, and Adjustments

Every S corporation that is incorporated in California, registered to do business in the state, doing business there, or earning California-source income must file Form 100S with the Franchise Tax Board each year, even in a loss year.{¹} The California Form 100S filing requirements include an entity-level tax of 1.5% on net income, an $800 annual minimum franchise tax as a floor, a return due on the 15th day of the third month after year-end, and a set of California schedules that adjust the federal 1120-S numbers to state law.{²}

Which S Corporations Have to File

A valid federal S election plus any one of the following creates a Form 100S 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 exceeding the annual sales, property, or payroll thresholds.
Receiving California-source income, even without a physical presence.{}¹

For 2025, an S corporation is doing business in California if California sales exceed $757,070, or if California property or payroll exceeds $75,707. The trigger is the lower of the dollar threshold or 25% of the company’s total in that category.{³} The FTB adjusts these annually.

First-Year Minimum Tax Waiver

The FTB waives the $800 minimum franchise tax for the first taxable year of a newly incorporated or newly qualified S corporation. The return itself still has to be filed. The waiver also applies if the S corporation did no business in California during a taxable year that lasted 15 days or fewer. After the first year, the $800 minimum applies every year the entity exists, even with no income.{¹}

How the Tax Is Calculated

California taxes S corporation net income at 1.5% after California adjustments and apportionment. The corporation pays the greater of this 1.5% tax or the $800 minimum, not both added together.{⁴} An S corporation with $40,000 of California net income owes $800, because 1.5% of $40,000 is only $600. Once net income passes roughly $53,334, the 1.5% calculation produces the larger number and becomes the tax due.{¹}

Built-In Gains Tax

If the S corporation converted from a C corporation and sells appreciated assets, a built-in gains tax may apply to the gain that existed at the time of the S election, taxed at California’s regular corporate rate of 8.84%.{⁵} The federal recognition period under IRC Section 1374(d)(7) is five years, but California does not conform.{⁶} The California recognition period is 10 years (120 months) from the first day the corporation became an S corporation.{} Track asset basis and fair market value as of the S election date for the full 10 years.

Excess Net Passive Income Tax

An S corporation carrying over accumulated earnings and profits from C corporation years owes an additional tax if its passive investment income (interest, dividends, rents, royalties, and annuities) exceeds 25% of gross receipts.{⁷} California taxes the excess at 8.84%. Distributing the accumulated C corporation earnings removes the trigger.

Required Schedules and Attachments

Form 100S builds off the finished federal Form 1120-S. The FTB directs filers to transfer information from federal Form 1120-S, Page 1, to Schedule F on Form 100S and attach the federal return with all supporting schedules.{⁴} Finalize the 1120-S first, because any error carries over.

California-specific schedules to attach:

Schedule K-1 (100S) for each shareholder, with separate columns for federal amounts, California adjustments, total California-law amounts, and California-source amounts.{}⁸
Schedule B (100S) for depreciation and amortization under California rules.{}⁹
Schedule R if the corporation has income inside and outside California, used to apportion business income.{}¹⁰
Schedule D-100S if the corporation had capital gains or losses.

California uses a single-sales factor apportionment formula for most businesses. Only the sales factor determines the state’s share of income, and sales are generally sourced to the market where the customer receives the benefit.{¹⁰} For a multi-state S corporation, knowing where each customer sits is the most important data to gather.

California Adjustments You Will Have to Make

The heart of Form 100S is reconciling federal taxable income to California taxable income. California conforms to parts of the Internal Revenue Code but departs in several places that usually produce a higher California figure, especially in the early years of owning depreciable assets.

Section 179 Expense Deduction

The federal Section 179 deduction for 2025 allows an immediate expense of up to $2,500,000 in qualifying property, with a phase-out starting at $4,000,000 in total property placed in service.{¹¹} California’s limit is $25,000, with a phase-out beginning at $200,000. An S corporation that took a large federal Section 179 deduction must add back the difference on the California return and depreciate the excess over the asset’s useful life under California rules.

Bonus Depreciation

California does not conform to federal bonus depreciation under IRC Section 168(k).{¹²} If bonus depreciation was claimed on the federal return, the entire amount is added back. The asset then depreciates under California’s standard rules, which generally follow the Alternative Depreciation System with longer recovery periods than federal MACRS.

Other Common Adjustments

California also diverges on net operating loss carryback (generally not allowed), certain exclusions for small business stock gains, and the treatment of like-kind exchanges involving out-of-state property. Each difference generates an addition or subtraction on the return that flows through to Schedule K-1 (100S) for shareholders.

Filing Deadlines and Extensions

Form 100S is due on the 15th day of the third month after the close of the tax year. Calendar-year filers file by March 15, matching the federal 1120-S deadline.{¹³}

California grants an automatic six-month extension to September 15 (for calendar-year filers) without a written request. File Form 3539 only if tax is owed and payment is not being made electronically. With no tax due, the extension is automatic as long as the return is filed by the extended deadline.{¹⁴}

The extension covers the return only. Any tax owed, including the minimum franchise tax and estimated income tax, is still due by the original March 15 deadline. Late payment triggers both penalties and interest, even on a return filed within the extension window.

E-Filing Requirement

California requires any business entity that prepares its return with tax preparation software to e-file.{¹⁵} Paper filing is available only when the return is prepared entirely by hand. Payments go through the FTB’s online portal, with direct debit as the preferred method.

Estimated Tax Payments

If total tax liability will reach $500 or more, the S corporation must make quarterly estimated payments using Form 100-ES. The four 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.{¹⁶}

The entire $800 minimum franchise tax is paid with the first installment, not spread across all four. The remaining three cover the estimated 1.5% income tax. Two safe calculation methods are available:

Prior-year safe harbor: base estimates on last year’s total tax, as long as last year’s tax was not zero.
Annualized income method: estimate current-year income based on earnings so far and project forward. This works for uneven income.

Penalties for Late Filing and Underpayment

Two separate penalties can stack.

Late Filing Penalty

An S corporation that files Form 100S late or files an incomplete return owes $18 per shareholder for each month (or partial month) the return is late, up to 12 months.{¹⁷} A five-shareholder S corporation filing four months late owes $360 ($18 × 5 × 4).

A delinquent filing penalty of 5% of unpaid tax per month, capped at 25%, also applies if tax remains unpaid when the return is filed.{¹⁷} Both can run at once. Reasonable cause is the only defense.

Estimated Tax Underpayment Penalty

Missing or underpaying estimated installments triggers a separate interest-based penalty on the shortfall for each quarter. The rate is 7% for the period from July 1, 2025, through June 30, 2026.{¹⁸} It runs from each installment’s due date until the installment is paid or the return due date arrives, whichever is first.

Pass-Through Entity Elective Tax

California offers an optional entity-level tax that can produce a federal benefit for shareholders. Under the pass-through entity (PTE) elective tax, the S corporation pays 9.3% of its qualified net income to the FTB, and each qualifying shareholder gets a nonrefundable credit on their personal California return.{¹⁹}

The PTE tax is deductible as a business expense on the S corporation’s federal return, which bypasses the $10,000 state and local tax deduction cap on individuals. Unused PTE credits carry forward for up to five years.{¹⁹}

For taxable years beginning on or after January 1, 2026, the S corporation makes the election by filing a completed FTB 3804 with its timely-filed return and paying an initial installment by June 15 of the election year. Missing or underpaying the June 15 installment does not kill the election, but each qualifying shareholder’s credit is reduced by 12.5% of their share of the shortfall.{¹⁹} Payments go through the FTB’s Web Pay portal or by mailing voucher FTB 3893. The election is available through 2030.

Filing the Final Return When Dissolving

When an S corporation winds down, filing obligations continue past the last day of business. File a final Form 100S covering the short tax year through the date operations ceased, check the “Final Return” box on the first page, and write “FINAL” at the top.{²⁰} Pay all outstanding tax balances, penalties, fees, and interest, and file any delinquent prior-year returns.

After filing the final return, the corporation has 12 months to file the appropriate dissolution documents with the Secretary of State — the Certificate of Dissolution (Form DISS STK) or the Short Form Certificate of Dissolution (Form DSF STK).{²⁰}

Timing matters. The corporation can avoid the minimum franchise tax for the current and subsequent taxable years if it files the final return on time (including any 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 step and the $800 minimum keeps accruing. If the FTB has already suspended or forfeited the entity, apply for a Certificate of Revivor and pay all outstanding amounts before the Secretary of State will accept the dissolution paperwork.

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Franchise Tax Board. S Corporations
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State of California. 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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California Franchise Tax Board. S Corporation Manual – Chapter 5
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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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Office of the Law Revision Counsel. 26 USC 1375
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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)
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Franchise Tax Board. 2025 Instructions for Schedule R
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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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Franchise Tax Board. Due Dates – Businesses
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California Franchise Tax Board. 2024 Form 3539
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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. FTB 1024 Penalty Reference Chart
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Franchise Tax Board. Interest and Estimate Penalty Rates
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Franchise Tax Board. Pass-Through Entity (PTE) Elective Tax
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Franchise Tax Board. FTB Publication 1038