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California PTE elective tax: election and payment records
The California PTE election connects an entity-level payment with owner credits. Organize the entity’s records and owner information for the CPA before treating a payment as an election.
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General information, not legal or tax advice.
Confirm eligibility and the extended taxable-year window
The extension covers taxable years beginning on or after January 1, 2026 and before January 1, 2031. Qualifying entities are taxed as partnerships or S corporations; publicly traded partnerships and entities allowed or required in a combined reporting group are excluded. Qualified owners must consent to inclusion of their share and guaranteed payments. Your CPA should review both entity and owner eligibility.
Sources: California Franchise Tax Board, Pass-through entity (PTE) elective tax
Make the annual election through the original return
FTB requires a completed FTB 3804 with a timely filed original entity return, not an amended return. The election is irrevocable for that year and binds consenting and nonconsenting owners. The elective tax rate is 9.3% of qualified net income. Keep the CPA’s calculation and owner-consent record with the return support.
Sources: California Franchise Tax Board, Pass-through entity (PTE) elective tax
Track the June payment apart from the final balance
Payment 1 is due on or before June 15 of the election year and equals the greater of $1,000 or 50% of the prior taxable year’s PTE elective tax paid. The remaining balance is due by the original return’s due date. Use FTB Web Pay or the FTB 3893 voucher, and keep these payments separate from the entity’s other tax payments.
Sources: California Franchise Tax Board, Pass-through entity (PTE) elective tax
Document the effect of a missed or short payment
For 2026 through 2030 taxable years, missing or underpaying the June 15 amount no longer prevents the election. Instead, qualified taxpayers reduce their credit by 12.5% of their pro rata share of the unpaid amount that was due. Give the CPA payment dates, confirmations and amounts so the credit effect can be calculated from evidence.
Sources: California Franchise Tax Board, Pass-through entity (PTE) elective tax
Coordinate owner credits with personal estimates
Owners claim the nonrefundable credit on FTB 3804-CR, with unused credits carried forward for up to five years. An entity’s federal deduction requires a California income addback. Separately, California’s individual estimated-tax instructions explain that increasing DE 4 withholding can reduce or eliminate personal estimated payments. Have the CPA coordinate owner credits, withholding and estimates; do not substitute personal payments for the entity’s PTE payment.
Sources: California Franchise Tax Board, Pass-through entity (PTE) elective tax; FTB 2026 Form 540-ES Instructions
Sources: confirm eligibility and the extended taxable-year window
Coordinate entity returns and personal estimates
Keep the PTE payment trail ready for the tax adviser
Tidwell helps reconcile entity tax payments and organize owner records. Your CPA determines the election, computes tax and credits, and prepares the returns.