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CALIFORNIA CORPORATE & SECURITIES LAW

O Frabjous Day! Court Holds Passive Member Is Not “Doing Business”

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 imposed without regard to whether the corporation is incorporated in California.  This makes the name of the tax somewhat misleading…

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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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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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