What Are "Total Gross Assets" for the Delaware Franchise Tax?

When calculating your Delaware Franchise Tax using the founder-friendly “Assumed Par Value Capital Method,” one of the key inputs you need is your company’s “Total Gross Assets.”

This term often causes confusion. Is it based on market value? Book value? Do certain assets not count? Fortunately, the State of Delaware does not leave this open to interpretation. The law provides a very precise definition that ties directly to your federal tax return.

The Official Source: Your U.S. Federal Tax Return (Form 1120)

The simplest way to understand the definition is this: “Total Gross Assets” for your Delaware Franchise Tax report is the “Total Assets” figure reported on your U.S. Corporation Income Tax Return, Form 1120, Schedule L.

Schedule L is the balance sheet portion of your federal tax return. The number you need is the final “Total Assets” figure for the end of the tax year (typically found on Line 15, Column (d) of the schedule).

Breaking Down the Legal Definition

The Delaware General Corporation Law, in Title 8, Chapter 5, § 503 (i), provides the official definition. Let’s translate this legal text into a clear set of rules:

Title 8 Chapter 5 § 503 (i) states such total assets and total gross assets shall be those “total assets” reported to the United States on U.S. Form 1120 Schedule L, relative to the company’s fiscal year ending in the calendar year prior to filing… The Secretary of State may at any time require a true and correct copy of such schedule to be filed… If such schedule or its replacement reports on a consolidated basis, the reporting corporation shall submit to the Secretary of State the consolidating ending balance sheets which accompany such schedule as a reconciliation…

Here is what that means in practice:

• It’s the Same Number: The law explicitly states that the number you use for your Delaware report must be the same “Total Assets” number you report to the IRS on your federal tax return’s balance sheet.
• It’s Based on the Prior Tax Year: For the Annual Report you file by March 1st, you use the asset figure from the federal tax return for the year that just ended. For example, for the report due March 1, 2026 (covering the 2025 tax year), you use the “Total Assets” from your 2025 Form 1120, Schedule L.
• The State Can Ask for Proof: The Delaware Secretary of State has the right to request a copy of your Form 1120, Schedule L, to verify that the asset number you reported is accurate. This underscores the importance of consistency and proper record-keeping.
• A Note on Consolidated Filings: If your Delaware corporation is part of a larger corporate group that files a single “consolidated” tax return with the IRS, you cannot use the total consolidated assets. You must provide additional documentation (consolidating balance sheets) that clearly breaks out and identifies the specific assets that belong only to the Delaware entity filing the report.

Your Action Plan

Finding your “Total Gross Assets” is a straightforward process that should be done in the correct order:

1. First, complete an accurate U.S. federal income tax return (Form 1120) for your corporation.
2. Locate the balance sheet, Schedule L, within that return.
3. Identify the value for “Total Assets” at the end of the fiscal year.
4. This is the number you must use for “Total Gross Assets” when calculating your Delaware Franchise Tax.

This direct link between your state and federal filings highlights the importance of a holistic compliance strategy. At Taxculate, we understand these intricate connections. We don’t just prepare your federal return in a vacuum; we ensure the data is accurate and ready for crucial state filings like the Delaware Franchise Tax, guaranteeing a consistent and compliant approach across all jurisdictions.