I received the following email from a client the other morning:
“Slight problem..…my Delaware franchise
tax report says I owe $45,000.”
For some reason Delaware likes to freak people out.
If you do something typical like authorize 10 million shares, the front page of your Delaware franchise tax report will show some outlandish amount of taxes owed. If you’ve never been through this before, you might be alarmed and send your attorney an email like the one above. I’ll respond with:
“Turn the form over. Calculate the tax using the alternative, par value method.”
When you do this, and you recalculate your taxed owed, you’ll email me back and say something like:
“I just recalculated using the assumed par value method, and it brought the bill down to $400. Does that sound right?”
And I will say, “Yeah, that sounds about right.”
