What Are Total Gross Assets for Delaware Franchise Tax?
When calculating your Delaware Franchise Tax using the Assumed Par Value Capital Method, one of the most important figures you need is your company’s “Total Gross Assets.”
Many business owners are unsure what this term actually means. Does it refer to market value, book value, or only certain company assets? Fortunately, Delaware law gives a clear definition that directly connects this amount to your federal tax return.
Where to Find Total Gross Assets
For Delaware Franchise Tax purposes, “Total Gross Assets” refers to the “Total Assets” amount listed on your U.S. Corporation Income Tax Return, Form 1120, Schedule L.
Schedule L is the balance sheet section of Form 1120. The number you need is the final “Total Assets” value reported at the end of the tax year, usually found on Line 15, Column (d).
Delaware’s Legal Definition Explained
Under Delaware General Corporation Law Title 8, Chapter 5, § 503(i), corporations must use the same total asset amount reported on Form 1120 Schedule L when filing their Delaware Franchise Tax report.
In simple terms, this means:
The Number Must Match Your Federal Return
The “Total Gross Assets” figure on your Delaware Franchise Tax filing should exactly match the “Total Assets” amount reported to the IRS on Schedule L of Form 1120.
Use the Previous Tax Year’s Assets
The Delaware Annual Report is due by March 1 each year. The asset amount used should come from the federal tax return for the previous tax year.
For example, if you file your Delaware Annual Report on March 1, 2026, you will use the “Total Assets” amount from your 2025 Form 1120 Schedule L.
Delaware May Request Verification
The Delaware Secretary of State may ask for a copy of your Schedule L to confirm the accuracy of the reported assets. Because of this, it is important to keep accurate records and ensure consistency between state and federal filings.
Rules for Consolidated Tax Returns
If your corporation files a consolidated federal tax return with other related entities, you cannot simply use the combined total assets amount.
Instead, you may need to provide consolidating balance sheets that clearly identify the assets belonging specifically to the Delaware corporation filing the report.
How to Find Total Gross Assets for Delaware Franchise Tax
Follow these steps to determine the correct amount:
- Use that amount as your “Total Gross Assets” for Delaware Franchise Tax calculations.
- Complete your corporation’s Form 1120 federal tax return.
- Locate Schedule L within the return.
- Find the “Total Assets” value at the end of the tax year.
Why Accurate Reporting Matters
Because Delaware Franchise Tax calculations rely directly on your federal tax return, accurate bookkeeping and tax preparation are essential. Any inconsistency between your federal and state filings can create compliance issues or lead to additional questions from the Delaware Secretary of State.
Businesses should ensure that their federal tax returns, balance sheets, and Delaware Franchise Tax filings all align correctly to avoid unnecessary penalties or delays.
