Assumed Par Value

Assumed par value is a calculation methodology used in Delaware's franchise tax system — specifically the Assumed Par Value Capital Method — that provides an alternative to the default Authorized Shares Method for calculating annual franchise tax liability for corporations incorporated in Delaware. Under this method, the assumed par value per share is calculated by dividing total gross assets (as reported on the corporation's federal tax return, Form 1120, Schedule L) by total issued shares, with the resulting per-share value used to compute the tax based on authorized shares. The formula is: tax = (authorized shares ÷ 10,000) × $400, but the assumed par value per share cannot be less than the result of total gross assets divided by total authorized shares. This method is critically important for venture-backed startups and corporations with large authorized share counts because the default Authorized Shares Method taxes based solely on the number of authorized shares, producing absurdly high tax bills — a corporation with 10 million authorized shares would owe $170,165 under the Authorized Shares Method but might owe only $400–$2,500 under the Assumed Par Value Capital Method if the company has limited gross assets relative to its share count. Delaware sends franchise tax bills using the Authorized Shares Method by default, causing panic among founders who receive six-figure tax bills for early-stage companies. Filing using the Assumed Par Value Capital Method requires reporting total gross assets and total issued shares on the annual report. doola ensures Delaware corporations are assessed using the correct and most advantageous franchise tax calculation method, potentially saving startups $10,000–$200,000 annually.