At what monetary threshold must entities provide an information return to the Franchise Tax Board for tax-exempt interest received from other states?

The correct threshold for entities to provide an information return to the Franchise Tax Board regarding tax-exempt interest received from other states is indeed $5. This amount is significant because it sets the minimum level at which the state requires reports to ensure compliance with tax laws. It allows the Franchise Tax Board to monitor and facilitate proper reporting of tax-exempt interest, which can affect an entity's tax obligations in California.

The choice specifying $5 reflects an understanding of California tax law requirements for information returns on minor amounts of income. By setting a lower threshold, it helps capture all relevant data and maintain transparency with the state's tax system. Other thresholds, such as $10 or higher amounts, would represent a more lenient reporting standard that could result in unreported tax-exempt interest income, leading to potential gaps in tax revenue or compliance issues.