Foreign LLC's Owned By CA Resident

[Corrado79]

I have an interesting tax issue. I live in California and have an Indiana LLC which acquired a condo in Indiana last year. In California, domestic LLC's have to pay $800/year as a "minimum tax."

Apparently, because I live in California, my Indiana LLC which owns an Indiana condo might be subject to that $800 minimum tax. Is this correct?

So, if I establish an LLC in each state I buy properties in the future, I will have to pay $800/year for each of them?

Anyone with CA tax experience, please help me. TIA!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Megan H]

Hi,

Your nexus for taxes is Indiana, not California in this case. There's no obligation to register to do business in California in this instance. However what typically happens is you take your shiny new LLC paperwork down to your local bank to open an account and hit a roadblock when the CA bank won't let you open an account until it's registered there. If that happens, I'd take a (tax-deductible) trip back to Indiana to (a) check on your property, and (b) open an account with a bank that has branches both in CA and Indiana - that way you can bank locally and escape the $800/year franchise tax.

Hope that helps!

Megan H

 

[Corrado79]

Thanks for the reply. Unfortunately, regardless of where my bank account is, I think because my "office" is located here in California, I have no choice.

 

[MsChristina]

Thanks for the reply. Unfortunately, regardless of where my bank account is, I think because my "office" is located here in California, I have no choice.

Yep, I think u have it right unfortunately...California goes so far as to say that if you use an accountant who happens to be in California to do your taxes for a foreign LLC that conducts business in another state, they consider you to be doing business in California and put you on the hook for the tax.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.