franchise tax

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Franchise Tax

In the United States, a state-level tax on a businesses and partnerships registered or chartered in that state. The franchise tax is paid annually and gives a business or partnership the right to continue to operate in that state. Franchise taxes are calculated differently in each state.

franchise tax

A tax on the right of a firm to do business within a certain geographic region.
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The nexus standards for state franchise taxes are much broader than for income taxes.
Corporations filing online may pay franchise taxes by Visa, MasterCard, Discover or electronic check.
The Arkansas Court of Appeals has held that "officers and directors of a corporation who actively participate in its operation during the time when the corporate charter is revoked for failure to pay corporate franchise taxes are individually liable for debts incurred during the period of revocation."
The ruling lists as deductible the Indiana gross receipts tax, Kentucky license tax, Michigan SBT, Washington and West Virginia B&O taxes, and other state net worth-based taxes, including the net worth portion of the Texas and Ohio franchise taxes.
In West Virginia, Pennsylvania and North Carolina, taxpayers have to report both income and franchise taxes on the same form.
The Internal Revenue Service disallowed the deductions for such franchise taxes on the grounds that an accrual was not permitted by section 461(d) and the pertinent regulations.
65-190 held that a refund of New York State corporation franchise taxes resulting from a net operating loss (NOL) carryback was accruable as income in the tax year of the loss that gave rise to the refund.
[section] 1.861-8(e)(6)(i) provides that the deduction for state income and franchise taxes is definitely related, and thus allocable, to the gross income with respect to which those taxes are imposed.
However, the limited partnership will be subject to the state's minimum franchise tax, because it is registered to do business in the state, and will be subject to both excise and franchise taxes if it does business in the state sufficient to establish nexus.
99-126,(22) the Tax Commissioner addressed the deductibility of the Illinois and Ohio franchise taxes. The Illinois franchise tax, which is imposed on corporations for the privilege of exercising their franchise or authority to transact business in the state, is based on paid-in capital.
To begin with, unlike the tax involved in Metropolitan Life, the corporate franchise taxes are imposed by the state constitution.
Accordingly, a QSSS may be liable for a number of "nonincome" taxes, such as franchise taxes based on net worth, equity or a fixed fee basis.