Net Worth Tax for Corporations - FAQ
What dates should I use on the corporate return under net worth tax beginning and ending dates?
Net worth tax is computed on the net worth of the corporation as reported on the prior year ending balance sheet and is due on or before the 15th day of the fourth month (C Corporations) or third month (S Corporations) following the beginning of the corporation's tax year. The beginning and ending dates for net worth tax would be one year later than the income tax beginning and ending dates. For example, the income tax beginning and ending dates are 1/1/00 through 12/31/00. The net worth tax beginning and ending dates would be 1/1/01 through 12/31/01.
How is the net worth tax computed for a short-period income tax return?
For short periods other than initial or final returns, the tax is computed on the net worth of the corporation from the ending balance sheet of the short period return. The tax is then prorated based on the number of months included in the short period return.
How is the net worth tax determined for an initial or final return?
The Initial Net Worth tax return is due the 15th day of the third month (for C corporations, 15th day of the fourth month for net worth years beginning on or after January 1, 2017; those normally reported on the 2016 income tax return) after incorporation or qualification. The net worth reported on this return is as of the date of incorporation or qualification. No income tax information is reported on the Initial Net Worth return. The net worth tax paid on this return covers the period beginning with the date of incorporation or qualification and ending with the end of the first income tax year. If this period is less than 6 months, the tax due is 50%. The second return that is required to be filed is used to report income tax for the period beginning with the date of incorporation or qualification and ending with the corporation's chosen year end and to report net worth tax for the next full year. This return is due on the 15th day of the third month (for C corporations, 15th day of the fourth month for net worth tax years beginning on or after January 1, 2017; those reported on the 2016 income tax return) after the end of the income tax year. A full year's net worth tax is always due with this first income tax return. The following example illustrates this. Date of incorporation or qualification, 3/18/00. Accounting year end chosen, 10/31/00. The Initial net worth return covers 3/18/00 through 10/31/00 and since this is greater than 6 months, a full year net worth tax is due. The first income tax return covers income tax year 3/18/00 through 10/31/00 and net worth tax year 11/01/00 through 10/31/01.
How are a Qualified Subchapter S Subsidiary (QSSS) and its parent treated for Georgia Net worth tax purposes?
The QSSS and the parent would file separate net worth tax returns. If the parent is not registered with the Secretary of State and does not do business or own property in Georgia or receive income from Georgia sources (other than thru the QSSS) they would not be required to file a net worth tax return. For income tax years beginning on or after January 1, 2016, the parent should also check the box on page 1 of the Form 600S if the parent is not subject to net worth tax. Alternately, a QSSS that is not registered with the Secretary of State and does not do business or own property in Georgia or receive income from Georgia sources would not be required to file a net worth return, even if the parent is required to do so.
Is a disregarded single member LLC subject to the Georgia net worth tax?
No. The single member LLC is not subject to the Georgia net worth tax. However, if the owner of the single member LLC is a corporation, the corporation is subject to the Georgia net worth tax if the single member LLC does business or owns property in Georgia.
Is an LLC who files as a partnership subject to Georgia Net Worth tax?
No. There is no Net Worth tax on partnerships.
Is an LLC who files as a corporation subject to Net Worth tax in Georgia?
How is net worth tax computed on a corporation incorporated in Georgia that does business both inside and outside the state?
A Georgia corporation or a domesticated foreign corporation is liable for net worth tax on 100% of the taxable net worth. For corporations incorporated in states other than Georgia, a ratio is computed using property and gross receipts within Georgia and the total everywhere.
What kinds of property are included in the net worth apportionment?
The property portion of the net worth ratio is computed as follows. For the "everywhere amount", the ending balance sheet asset amount from the Federal income tax return should be used. The "within Georgia amount" must be calculated using assets owned in Georgia. For net worth tax purposes tangible and intangible assets, like cash, accounts receivable, allowance for bad debts, accumulated depreciation, etc. are included.
Does a corporation have to file a net worth return on Form 600 or 600S even if the corporate income tax portion of the return does not have to be filed?
Yes, if you do business, own property in Georgia, or are registered with the Secretary of State you must file the net worth portion of the Georgia Form 600 or 600S every year.
What is meant by "foreign" corporation?
A corporation incorporated in another state, territory, or nation.
Are homeowners associations liable for the net worth tax?
If not organized for pecuniary gain or profit, a homeowners association is not liable for the net worth tax. Write "not organized for profit" in schedule 2 of Form 600. If organized for profit, a homeowners association is liable for net worth tax.
A corp. has a partnership interest, does the pro rata share of the partnership's receipts and assets also get added to the numerator and the denominator for calculating the net worth tax of the corp. as they do for the calculation of income tax?
Yes. O.C.G.A. Section 48-13-72 imposes a net worth tax on a foreign corporation which is doing business or owning property in this state. The language is nearly identical to the language in O.C.G.A. Section 48-7-31 and Regulation 560-7-7-.03 and as such the same principles apply. Regulation 560-7-7-.03 requires a corporation which is involved in a business joint venture, or which is a partner in a partnership to include its prorata share of the joint venture or partnership property, payroll, and gross receipts in its own apportionment formula.