Business Law

California’ 15-Day Rule

Please share:

It is at this time of the year that businesses and their attorneys are interested in California’s so-called 15-Day Rule and how it might apply to them. Under California Law (R&TC Sections 17936, 17946, 17948.2 and 23114) there is conditional relief available to business entities (limited partnerships, limited liability partnerships, limited liability companies, and corporations) from the general requirement to pay the $800 annual/minimum tax. This relief is available only if:

  • The tax year was 15 days or less
  • The entity did not conduct business in the state during the tax year.

Simply stated if a business was started during the last 15 days of December of 2018 and did no business in California during those 15 days, then they would be exempt from paying the $800 annual/minimal tax for 2018, generally due to the Franchise Tax Board on the 15th of April 2019. There would be no FTB minimum tax due until the 15th of April, 2020 as the entity’s first tax year starts January 1, 2019.

However, it should be noted that the 15-day rule does not normally apply to entity conversions. According to FTB guidelines, this is because such entities are usually continuously doing business during both prior to the conversion and thereafter so both the converting entity and the converted entity will each have a filing requirement.

Unlike the specific short tax year discussed above, when it comes to determining due dates for payment and filing for newly-formed entities, the FTB notes that when counting months for a tax year (that is more than 15 days), there is no 15-day rule in the law. Any fraction of month, counts as a full month, whether it be at the beginning of a tax year, such as the start of a new business, or at the end of a tax year. December is the exception, as noted above.

For a full explanation of the California 15-Day Rule, including filing instructions and requirements, please refer to FTB publication 1060 available on the FTB website at

This e-bulletin was prepared by Ronald Newton, Esq., of the Law Firm of Ronald Newton in Ontario, CA (

Forgot Password

Enter the email associated with you account. You will then receive a link in your inbox to reset your password.

Personal Information

Select Section(s)

CLA Membership is $99 and includes one section. Additional sections are $99 each.