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CALIFORNIA CORPORATE & SECURITIES LAW

How To Revive A Suspended Corporation

Yesterday’s post concerned the circumstances that will cause the California Franchise Tax Board to suspend a corporation’s rights, powers, and privileges to conduct business in California.  Suspension, however, is reversible, although it isn’t necessarily easy.  First, is the matter of delinquent returns.  The Franchise Tax Board requires that all delinquent tax returns be filed.  Second,…

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Suspension By The Franchise Tax Board

Yesterday’s post concerned the two circumstances in which the Secretary of State might suspend a corporation.  The California Franchise Tax Board will suspend a corporation if it fails to pay taxes, penalties, fees or interest (Cal. Rev. & Tax. Code § 23301) or fails to file a return (Cal. Rev. & Tax. Code § 23301.5). These…

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Is The FTB’s Argument Nothing More Than Blowing In The Wind?

Readers may remember this blog post from September of last year: Nevada Supreme Court Upholds Fraud Verdict Against The California Franchise Tax Board.  The subject of the post was Franchise Tax Bd. v. Hyatt, 335 P.3d 125 (Nev. 2014) in which the Nevada Supreme Court partially affirmed a Nevada jury verdict against the California Franchise Tax Board. …

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California AG Asks Retailers And Manufacturers To Report On Supply Chains Act Compliance

The California Attorney General’s office recently sent letters to retailers and manufacturers asking them to demonstrate compliance with the California Transparency in Supply Chains Act or why they are not subject to the act.  I first wrote about the act in early 2011.  It requires retail sellers and manufactures doing business in California to disclose…

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Judge Rules Against FTB In “Doing Business” Definition

Over a year ago, I wrote about an Iowa corporation, Swart Enterprises, Inc., which operates a 60 acre farm in Kansas. Swart has no physical presence in California. It owns no real or personal property in California.  However, Swart had invested $50,000 investment in a manager-managed California LLC.  Swart’s investment represented an ownership interest in the LLC…

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Nevada Supreme Court Upholds Fraud Verdict Against The California Franchise Tax Board

The Franchise Tax Board’s Shande This is case that has been more than two decades in the making.  It began in the 1990s when inventor Gilbert Hyatt filed a California tax return showing that he relocated from California to Nevada.  Consequently, he reported licensing payments for only part of the year.  California was suspicious because…

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The Franchise Tax Board’s Doing Business Legal Ruling – Ex Nihilo, Aliquid Fit

Today’s post will try to put the Franchise Tax Board’s recent Legal Ruling 2014-01 in perspective by imagining the following inquisition by the Franchise Tax Board: FTB: We suspect that you are doing business in California and have failed to file your tax returns and pay taxes and fees. Corporation:  Surely, you must be mistaken.  We don’t…

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FTB Issues Legal Ruling Addressing Filing And Franchise Tax Obligations of LLCs And Their Members

I’ve written several posts on discussing the meaning and ramifications of “doing business” for California tax purposes.  See, e.g., Why Your LLC May Be Doing More Than You Think In California Even When It’s Doing Nothing, 60 Acres And A Lawsuit Challenging The FTB’s Interpretation of “Doing Business” (sorry, I don’t know the current status of…

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Are Corporations Profitable?

Do corporations make a profit?  I think it is beyond peradventure that some corporations make a profit.  But do most (i.e., more than half) make a profit?  If more than half do make a profit, how many more than half? To find an answer (not necessarily the answer), I recently took a look at Table C-1…

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Why Your LLC May Be Doing More Than You Think In California Even When It’s Doing Nothing

Until two years ago, determining whether a company was “doing business” in California depended upon whether it was “actively engaging in any transaction for the purpose of financial or pecuniary gain or profit”.  Cal. Rev. & Tax. Code § 23101.  While this is a very open-ended definition, the statute at least required that a taxpayer be actively engage in a transaction.  Requiring…

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