The California Office of Tax Appeals (OTA) found that a foreign single-member LLC domiciled in Georgia was “doing business” in California by reason of its 50 percent interest in a pass-through LLC operating in California (LLC) and thus, was subject to the state’s annual LLC tax. The OTA focused on California’s definition of “doing business”
Marketplace Monday – California Legislation Pending on Marketplace Sellers
California Assembly Bill (AB) 1790 passed the Legislature on September 26, 2019 and was sent to the Governor. The Governor has until October 13th to act on the bill. The Legislative Counsel’s Digest for AB 1790 states the bill would require a marketplace, as defined, to ensure that their terms and conditions regarding commercial
It’s None of Your Business: California Office of Tax Appeals Rejects FTB’s Broad Test for Doing Business
The California Office of Tax Appeals (OTA) reversed the Franchise Tax Board’s (FTB) determination that an out-of-state limited liability company (LLC) had taxable nexus with California solely because it held an ownership interest in an LLC operating in the state that ranged from 1.12% to 4.75%. California imposes an annual $800 tax on LLCs “doing
Podcast: P.L. 86-272 Protection for Deliveries
California FTB Chief Counsel Issues Ruling on Financial Corporations and Interest Rate Hedging Contracts
On November 2, 2018, the Chief Counsel of the California Franchise Tax Board issued Chief Counsel Ruling No. 2018-01, determining: (1) that a taxpayer servicing mortgages was not a financial corporation for purposes of the corporation franchise tax; and (2) gains from interest rate hedging contracts are general income, not money or moneyed capital. Although
California Court of Appeal Affirms that Transactions Involving Out-of-State Title Transfer Are Subject to Local Use Tax, Not Local Sales Tax
The California Court of Appeal affirmed a trial court decision finding that transactions involving an Internet retailer headquartered in Brisbane, California, were subject to local use tax, rather than local sales tax, because title in the transactions at issue passed outside California. The court explained that when a retail seller delivers goods to a common
Eversheds Sutherland SALT Scoreboard Publication–Third Quarter 2018
This is the eleventh edition of the Eversheds Sutherland SALT Scoreboard, and the third edition of 2018. Each quarter, we tally the results of what we deem to be significant taxpayer wins and losses and analyze those results. This edition of the SALT Scoreboard includes a discussion of California combined reporting, insights regarding the Washington
Taking Taxpayers for a Ride: California Upholds Mandatory Combined Reporting for Interstate Motorcycle Retailer
The California Court of Appeals affirmed a trial court’s holding that the California Franchise Tax Board can require interstate unitary businesses to use combined reporting, even though combined reporting is optional for intrastate unitary businesses. The taxpayer, a motorcycle retailer, argued that the differential treatment of interstate and intrastate business gave a direct commercial advantage
California Seeks Input on Clean Energy Equipment Tax Exemption
During the second half of 2017, California expanded its partial sales and use tax manufacturing and research and development exemption to include electric generation and distribution equipment. The legislative changes are particularly favorable to businesses engaged in electric generation through the use of renewable energy sources.
The California Department of Tax and Fee Administration (CDTFA)
California’s Altered Tax Landscape
On January 10, 2017, California Assembly member Phil Ting introduced and read Assembly Bill (“AB”) 102 for the first time. Introduced as a placeholder bill, AB 102 consisted of a single section and sentence: “SECTION 1. It is the intent of the Legislature to enact statutory changes relating to the Budget.”
Then, in less than