In a decision that may have significant repercussions regarding apportionment for California corporate tax purposes, the California Office of Tax Appeals (“OTA”) has denied the Franchise Tax Board’s (“FTB”) petition for a...more
In the Appeal of Sheward, 2022-OTA-228P (May 25, 2022), the California Office of Tax Appeals (OTA) held the California Franchise Tax Board (FTB) failed to follow its own market-based sourcing apportionment regulation by...more
Under the California General Corporation Law a corporation which is dissolved nevertheless continues to exist for the purpose, among others, of prosecuting actions. Cal. Corp. Code § 2010(a). Further, no action to which a...more
Since 2017, the California Franchise Tax Board has been working on revisions to its regulations for market-based sourcing regulation for income from services and intangibles and for petitioning for alternative apportionment....more
Anyone could see that, for a limited partnership (“LP”) that was a “tax nothing” – i.e., one “disregarded” for federal income tax purposes – the corresponding California treatment was very confusing. To clear up this...more
Yesterday, the California Franchise Tax Board convened a public meeting to discuss tax compliance within the growing gig economy and the challenges of meeting these obligations....more
On Jan. 9, the United States Supreme Court heard oral argument in Franchise Tax Board v. Hyatt, a case addressing whether state agencies possess sovereign immunity from suit in sister state courts. Based on the oral argument,...more
OTA rules for out-of-state corporation. The FTB has broadly interpreted California’s “doing business” standard for decades. The California Office of Tax Appeals (OTA) recently released to the public an opinion dated...more
On September 23, 2018, Senate Bill 274, Administration of taxes: notice of deficiency assessment (SB-274), was signed into law by Governor Jerry Brown of California. With the enactment of SB-274, California has adapted its...more
When the legislature enacted the former Beverly-Killea Limited Liability Company Act in 1994 it included a levy on LLCs equal to specified dollar amounts based on the total income from all sources reportable to this state for...more
While the State of Delaware has numerous attractive aspects for entities that incorporate there (a flexible corporation statute, the well-respected Court of Chancery, a legislature that prioritizes the stability of Delaware’s...more
The California Franchise Tax Board (“FTB”) started 2017 with a setback as the Court of Appeal for the Fifth Appellate District held in Swart Enterprises, Inc. v. Franchise Tax Board that the FTB could not impose California’s...more
On January 12, 2017, the California Court of Appeal held in a published opinion that a taxpayer passively holding a 0.2 percent interest in a California-based limited liability company (CA LLC) was not “doing business” in the...more
The State of California imposes its franchise tax on every corporation (other than a bank, financial corporation or exempt corporation) that is “doing business” in California. Cal. Rev. & Tax Code § 23151. This tax is...more
In This Issue: - Where’s Walden? Finding Protection under the Due Process Clause - Upcoming Speaking Engagements - CFCs and Subpart F Income in a California Water’s-Edge Election and What’s Wrong with the Apple...more
During the last several years, the California Franchise Tax Board (“FTB”) has been closely scrutinizing section 1031 exchanges, and finding section 1031 exchanges to be a fruitful area for state tax audits. While California...more
As we have noted previously, many property owners are aware that one can sell investment property and reinvest the sales proceeds in like-kind investment property without having to pay tax on the sale. Such transactions are...more