Investment Value for Out-of-State LLCs Sets Tax, California Says

July 31, 2021, 12:49 AM

Two out-of-state limited liability companies with small shares in California real estate investments owe state tax because the value of their shares is large enough to be deemed as doing business in the state, the Office of Tax Appeals said.

The precedential opinion published Friday is the latest in a string of rulings establishing when the Franchise Tax Board can tax out-of-state investors in LLCs. Although the amount of LLC tax due by individual investors is small—$800 a year—the tax is imposed on thousands of investors, some of whom are part of ongoing class actions in state court or were ...

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