Delaware tax: delaware Corporate Income Tax FAQs
Q. What is Delaware's corporate income tax rate?
A. Every domestic or foreign corporation doing business in Delaware, not specifically exempt under Section 1902(b), Title 30, Delaware Code, is required to file a corporate income tax return (Form 1100 or Form 1100EZ) and pay a tax of 8.7% on its federal taxable income allocated and apportioned to Delaware. This tax is based on an equally weighted three-factor method of apportionment. The factors are property, wages and sales in Delaware as a ratio of property, wages and sales everywhere.
Q. What entities must file and/or pay Delaware corporate income tax?
A. Every domestic or foreign corporation doing business in Delaware, not specifically exempt under Section 1902(b), Title 30, Delaware Code, is required to file a corporate income tax return (Form 1100 or Form 1100EZ) regardless of the amount, if any, of its gross income or its taxable income. The taxable status of a corporation in Delaware follows the federal treatment of the corporation.
Q. What is the due date for filing a Delaware corporate income tax return?
A. Delaware corporate income tax returns are due in the case of a calendar year taxpayer, on or before April 1 of the following year. In the case of a fiscal year taxpayer, the return is due on or before the first day of the fourth month following the close of the fiscal year. Please note a federal extension automatically extends the Delaware due date. An extension of time to file is not an extension of time to pay.
Q. Does Delaware accept consolidated returns?
A. No. Consolidated corporate income tax returns are not permitted under Delaware law. Each corporation which is a member of a consolidated group must file a separate return reporting income and deductions, as if a separate Federal income tax return was filed.
Q. How does Delaware treat S-Corporations?
A. Every S-Corporation deriving income from sources within Delaware is required to file a Form 1100S, S-Corporation Reconciliation and Shareholders Information Return. Delaware recognizes the federal S election and does not impose corporate income tax on pass-through income.
Q. What are the estimated tax filing requirements of an S-Corporation?
A. Every S-Corporation deriving income from sources within Delaware must make estimated payments of personal income tax on behalf of its non-resident shareholders. Payments are based on the non-residents' share of the distributive income of the corporation. Resident and non-resident shareholders must report their respective share of S distributive income on their individual personal income tax returns.
Q. Does Delaware have a minimum corporate income tax?
A. No. Delaware law does not require the payment of a minimum corporate income tax.
Q. Does Delaware permit the carry back of a net operating loss (NOL)?
A. Delaware permits businesses who have a net operating loss in one year to carry back no more than $30,000 for each of the prior 2 years in order to offset any profit. The carryforward period is 20 years. The amount of the net operating loss recognized for Delaware corporate income tax purposes is only to the extent of the amount recognized for Federal purposes. Please see corporate income tax instructions for further details. Note: A special provision allows taxpayers to carry back 2008 NOLs up to 5 years. Please see IRS Publication 536 at www.irs.gov for further details.
Q. Is a copy of a corporation's federal income tax return (Form 1120, 1120A or 1120S) required to be attached to the Delaware corporate return?
A. Yes. Delaware requires every corporation filing a Delaware corporate income tax return to attach a completed copy of a pro forma federal tax return, including all schedules and attachments. The forms can be found at www.irs.gov.
Q. What are the corporate income tax filing requirements for an exempt corporation?
A. Generally, non-profit organizations who are recognized by the IRS as a 501(c)(3) non-profit organization do not have to file a Delaware corporate income tax return. Please see Section 1902(b), Title 30, Delaware Code, for a detailed list of exempt corporations. Please note, most non-profit organizations are required to file an annual report with the Delaware Division of Corporations.
Q. What are the corporate income tax filing requirements for a holding company?
A. Corporations whose activities in Delaware are limited to the maintenance and management of their intangible investments may be exempt under Section 1902(b)(8), Title 30, Delaware Code. Corporations may obtain a specific ruling from the Division of Revenue by submitting an Application of Exemption, Form 1902AP, describing their operations and stating the grounds for the exemption under Section 1902(b)(8). Please note, Section 1904(f), Title 30, Delaware Code, requires that corporations exempt under Section 1902(b)(8) file an Annual Information Return (Form 1902(b)) reporting sources of income and services provided within and without Delaware.
Q. What penalties apply to late filing and payment of corporate income tax?
A. Returns filed late are subject to a penalty of 5% per month, up to a maximum of 50% of the tax liability due, plus interest of ½% per month from the original due date until paid. In addition to the above penalties and interest, an additional penalty of 1% per month (not to exceed 25%) is imposed for failure to pay (in whole or in part) the tax liability shown to be due on a timely filed return.