Current through Register 2021 Notice Reg. No. 52, December 24, 2021
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.
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.
, 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
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
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
Revenue and Taxation Code).
Cal. Code Regs. Tit.
Note: Authority cited: Section
Revenue and Taxation Code. Reference: Section
Revenue and Taxation Code.
1. New Reg.
23501-23504 filed 12-14-64; effective thirtieth day thereafter (Register 64,
2. Renumbering and amendment of Section 23501-23504 to
Section 23501 filed 9-3-82; effective thirtieth day thereafter (Register 82,
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).