CA Corp filing

[Robert M. Gary]

I have my airplane registered in a "Mutual Benefit Corp" in the state
of California. Every year I get a nastygram from the state saying I
need to fill out some soft of tax return. They also say I'll have to
pay a percentage fine for being late (which I assume is zero since the
corp doesn't make any money, its just a holding corp for me). If
anyone else uses this set up, what FTB form to you submit?
-Robert

[Casey Wilson]

"Robert M. Gary" > wrote in message
om...
> I have my airplane registered in a "Mutual Benefit Corp" in the state
> of California. Every year I get a nastygram from the state saying I
> need to fill out some soft of tax return. They also say I'll have to
> pay a percentage fine for being late (which I assume is zero since the
> corp doesn't make any money, its just a holding corp for me). If
> anyone else uses this set up, what FTB form to you submit?
> -Robert

Hi Robert,

I'm no expert, nor am I qualified to give any tax or legal advice. You can
find the information you require here:
http://www.leginfo.ca.gov/calaw.html
The California Secretary of State or the state Attorney General's office
would be glad to explain it all to you.

Look at the Corporations Code and the Revenue and Taxation Code. I think
you will find that if the corporation is registered in California and does
not meet the federal description of a nonprofit corporation under the rules
of 501(c)(3) it is liable for a minimum taxation. I'm not sure what the
number is today, but it was $800. Note there is a distinct difference
between a nonprofit and not-for-profit corporation.

I'm pretty sure the codes apply even if the corporation breaks even or shows
a net loss during the taxable period. You might also find that any assets
owned by the nonprofit corporation are subject to a property tax in either
the county where the property is held or the county of record of the
corporation.

[Craig Prouse]

Robert M. Gary wrote:

> I have my airplane registered in a "Mutual Benefit Corp" in the state
> of California. Every year I get a nastygram from the state saying I
> need to fill out some soft of tax return. They also say I'll have to
> pay a percentage fine for being late (which I assume is zero since the
> corp doesn't make any money, its just a holding corp for me). If
> anyone else uses this set up, what FTB form to you submit?

What is a "mutual benefit corp"? My knowledge of CA corporate taxes is
limited to my qualifications as the treasurer of a small nonprofit corp, but
my understanding is similar to Casey's. If you're not a qualified
nonprofit, you are generally subject to an annual franchise tax in addition
to the tax on your operational income.

If you're required to file, FTB 100 is the usual form.
Forms and info here:

http://www.ftb.ca.gov/

[Don Tuite]

misc.taxes.moderated is a good place to ask.

Don

On Wed, 15 Oct 2003 15:14:53 -0700, Craig Prouse >
wrote:

>Robert M. Gary wrote:
>
>> I have my airplane registered in a "Mutual Benefit Corp" in the state
>> of California. Every year I get a nastygram from the state saying I
>> need to fill out some soft of tax return. They also say I'll have to
>> pay a percentage fine for being late (which I assume is zero since the
>> corp doesn't make any money, its just a holding corp for me). If
>> anyone else uses this set up, what FTB form to you submit?
>
>What is a "mutual benefit corp"? My knowledge of CA corporate taxes is
>limited to my qualifications as the treasurer of a small nonprofit corp, but
>my understanding is similar to Casey's. If you're not a qualified
>nonprofit, you are generally subject to an annual franchise tax in addition
>to the tax on your operational income.
>
>If you're required to file, FTB 100 is the usual form.
>Forms and info here:
>
>http://www.ftb.ca.gov/

[Robert M. Gary]

"Casey Wilson" > wrote in message >...
> "Robert M. Gary" > wrote in message
> om...
> > I have my airplane registered in a "Mutual Benefit Corp" in the state
> > of California. Every year I get a nastygram from the state saying I
> > need to fill out some soft of tax return. They also say I'll have to
> > pay a percentage fine for being late (which I assume is zero since the
> > corp doesn't make any money, its just a holding corp for me). If
> > anyone else uses this set up, what FTB form to you submit?
> > -Robert
>
> Hi Robert,
>
> I'm no expert, nor am I qualified to give any tax or legal advice. You can
> find the information you require here:
> http://www.leginfo.ca.gov/calaw.html
> The California Secretary of State or the state Attorney General's office
> would be glad to explain it all to you.
>
> Look at the Corporations Code and the Revenue and Taxation Code. I think
> you will find that if the corporation is registered in California and does
> not meet the federal description of a nonprofit corporation under the rules
> of 501(c)(3) it is liable for a minimum taxation. I'm not sure what the
> number is today, but it was $800. Note there is a distinct difference
> between a nonprofit and not-for-profit corporation.
>
> I'm pretty sure the codes apply even if the corporation breaks even or shows
> a net loss during the taxable period. You might also find that any assets
> owned by the nonprofit corporation are subject to a property tax in either
> the county where the property is held or the county of record of the
> corporation.

That's one of the reasons I incorportated as a Mutual Benefit vs. a
for profit company (remember that not for profit != charity ).

[Casey Wilson]

corporation.
>
> That's one of the reasons I incorportated as a Mutual Benefit vs. a
> for profit company (remember that not for profit != charity ).

Once again, I preface my comments with the caveat that I am not
qualified to offer any legal advice.
I did some skimming through the California Corporations Code because I
was not familiar with the term "mutual benefit.' What I found was that the
two words are tied to 'nonprofit' as in 'nonprofit mutual benefit
corporation.'
In the definition of that type is the excerpt: "...a corporation may be
formed under this part for any lawful purpose; provided that a corporation
all of the assets of which are irrevocably dedicated to charitable,
religious, or public purposes..."
I am somewhat familiar with nonprofit corporations, having spent a dozen
or so years on a variety of 501(c)(3) corporate boards and five years as
corporate president of one. I am perplexed by at least two things.
First, I don't understand your statement above. Not for profit
corporations and charities are not mutually inclusive.
Second, I get the impression that you formed mututal benefit corporation
and transferred title of some asset(s), perhaps an airplane, to the
corporation in some attempt to shield it/them from California's oppressive
Revenue and Taxation Code. I hope that works out okay for you.
Reread my caveat, then let me say that, to the best of my knowledge, the
California Attorney General's office relies on the federal Internal Revenue
Service to provide a letter of determination that a corporation meets the
statutory standards for a nonprofit organization. It sounds like you need to
have the Attorney General's office send a copy of the determination to the
revenue and taxation guys.

Regards,

Casey

[Cub Driver]

>I have my airplane registered in a "Mutual Benefit Corp" in the state
>of California. Every year I get a nastygram from the state saying I
>need to fill out some soft of tax return.

This is very odd. Are you sure it's a tax return and not a mere
report? I have a New Hampshire corp. I don't have to fill a tax return
unless it grosses more than $50,000. However, I do file a one-page
report and pay a $100 fee every February.

all the best -- Dan Ford
email: www.danford.net/letters.htm#9

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