Frequently Asked Questions About Franchise Tax

No. A sole proprietorship is not subject to the Kansas franchise tax and is therefore not required to file a franchise tax return.

No. Beginning with the tax year 2008 entities that are subject to the Kansas franchise tax but which have a net worth of less than $1 million are not required to file a franchise tax return.
Like income tax, franchise tax return is filed at the end of the tax year. So, when a corporation files its franchise tax return in 2011 it is filing for the 2010 tax year.
If an LLC starts in 2010 it will be responsible for filing a franchise tax return in 2011 and paying the franchise tax for tax year 2010 (if the other filing requirements are met). To determine the franchise tax liability for the initial year of formation, the LLC should use its balance sheet for that year.
The phrase “next preceding tax period” refers to the tax year for which the franchise tax return is being filed. It refers to tax year 2010 for franchise tax returns filed in 2011.
No. The provisions of K.S.A. 17-7501 do not apply to the Kansas franchise tax for tax years commencing afterDec. 31, 2003.
The partnership and the S corporation are separate legal entities. The partnership must file a franchise tax return for its tax year ending Sept. 30, 2009, which includes the income of the separating partner until April 30, 2010. The S corporation must file a franchise tax return for its year ending Dec. 31, 2010.
Yes. The liquidated entity would be responsible for a final franchise tax return just like it would be responsible for a final income tax return.
Under the scenario it appears each of the partnerships would have “net capital accounts located or used in Kansas at the end of the preceding taxable year as required to be reported on the federal partnership return of income of $1 million or more”. Therefore, each of the partnerships would be required to file and pay franchise tax.
The fact that an entity is disregarded for federal income tax purposes does not mean it is disregarded for Kansas franchise tax purposes. If otherwise required, the disregarded entity may be responsible for filing its own franchise tax return.
According to Kansas law, every entity subject to the Kansas franchise tax shall file, “a balance sheet listing all assets and liabilities as of the end of the tax year, as reported in the federal income tax return on form 1120 or, if no such federal return is required to be filed, such balance sheet information as otherwise required by the secretary . . .”. Therefore, in the context of the question, the balance sheet for income tax purposes and for franchise tax purposes will be the same.
As noted in the previous answer, according to Kansas law, every entity subject to the Kansas franchise tax shall file, “a balance sheet listing all assets and liabilities as of the end of the tax year, as reported in the federal income tax return on form 1120 or, if no such federal return is required to be filed, such balance sheet information as otherwise required by the secretary . . .”. Therefore, in the context of the question, the S corporation and each of the subsidiaries required to file a franchise tax return will be required to file a separate balance sheet listing all the assets and liabilities of each separate entity.
According to Kansas law, every entity subject to the Kansas franchise tax shall file, “a balance sheet listing all assets and liabilities as of the end of the tax year, as reported in the federal income tax return on form 1120 or, if no such federal return is required to be filed, such balance sheet information as otherwise required by the secretary . . ”. The law does not make provision for removing subsidiaries from a parent’s balance sheet for franchise tax purposes. Therefore, all subsidiaries will be included on the parent’s balance sheet regardless of whether the subsidiary meets the filing threshold requirements for the franchise tax.
Every entity that files a franchise tax return should submit its own balance sheet. If the entity does not prepare a separate balance sheet for federal income tax purposes, it can use the standard balance sheet available as part of the Kansas franchise tax return.
Every entity that files a franchise tax return should submit its own balance sheet. If the entity does not prepare a separate balance sheet for federal income tax purposes, it can use the standard balance sheet available as part of the Kansas franchise tax return.
A bank holding company is required to file a franchise tax if after subtracting out the value of the bank’s assets, it has assets of $1 million or more of non-bank assets. The balance sheet should show only the non-bank assets.