California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 3 - Corporation Income Tax › Article 1 - Imposition of Tax › Section 23501 - Corporations Subject to Tax Under Chapter 3

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In General. Every corporation, domestic
					 or foreign, which is not doing business in this State and not expressly exempt
					 under Article 1 of Chapter 4 or the Constitution of the State of California,
					 but which derives income from sources within this State or from activities
					 carried on in this State, is subject to the tax imposed under Chapter 3.
The income from sources within this State of corporations
						doing business in this State is included in the measure of the tax imposed
						under Chapter 2. Consequently, such corporations are not subject to the tax
						imposed under Chapter 3.
(b)
					 Foreign Corporations. If the only activities of employees of foreign
					 corporations within this State engaging exclusively in interstate commerce are
					 the solicitation of orders for goods to be shipped to customers in this State
					 from points outside this State, the corporations are probably within the
					 purview of Public Law
					 86-272 (15 U.S.C. Sections 381, et. seq),.
					 Accordingly, such corporations would not be subject to the tax imposed under
					 Chapter 3.
(c) The income from
					 sources within this State of holding companies, i.e., corporations organized to
					 hold the stocks or bonds of other corporations and which engage in no other
					 activities, inactive business corporations, and corporations whose activities
					 are not of such a character as to constitute doing business, is likewise
					 taxable under Chapter 3, since such corporations, are not subject to the
					 franchise tax measured by net income imposed by Chapter 2. However, such
					 corporations are subject to the minimum franchise tax imposed by section
					 23153,
					 Revenue and Taxation Code, if they are incorporated in this State or are
					 qualified to do business in this State, even if they do not actually do
					 business in this State.
(d) As used
					 in this regulation, "Chapter 2" refers to Chapter 2 of Part 11, Division 2 of
					 the Revenue and Taxation Code (beginning with section
					 23101
					 of the Revenue and Taxation Code) and "Chapter 3" refers to Chapter 3 of Part
					 11, Division 2 of the Revenue and Taxation Code (beginning with section
					 23501,
					 Revenue and Taxation Code).
1. New
						Reg. 23501-23504 filed 12-14-64; effective thirtieth day thereafter (Register
						64, No. 25).
2. Renumbering and amendment of Section
						23501-23504 to Section
						23501 filed 9-3-82; effective
						thirtieth day thereafter (Register 82, No. 37).
3. Change without
						regulatory effect amending section and NOTE filed 4-2-2001 pursuant to section
						100, title 1, California Code of
						Regulations (Register 2001, No. 14).
Note: Authority cited: Section
						  19503,
						  Revenue and Taxation Code. Reference: Section
						  23501,
						  Revenue and Taxation Code.