AB 1605 Summary

• Reduces the minimum annual franchise tax from $800 to $99 for small businesses (limited partnerships, limited liability companies, limited liability partnerships, and corporations) that first commence business operations on or after January 1, 2013.

• Exempts qualifying small businesses from the minimum franchise tax for their first taxable year, then requires the $99 annual minimum tax in subsequent years if they remain small businesses.

• Defines "small business" as an entity with gross receipts of $1,000,000 or less in the previous taxable year, excluding specific non-business income items such as loan repayments, stock issuances, litigation damages, and tax refunds.

• Prohibits reorganizations undertaken solely to reduce minimum tax liability from qualifying for the reduced rate.

• Takes effect immediately as a tax levy.