California Franchise Tax for Passthrough Entities with Nonresident Members (Currently Unavailable)

Author: Michael Bannasch

With California as the largest state economy in the U.S., it is very common for companies to end up doing business there. When those companies are passthrough entities, matters can get tricky for the company and its owners. They need to be sure tax is paid in – at the right time and in the right way, and the rules to do so can vary based on what type of passthrough entity is involved, what types of owners (e.g. corporate vs. individual, foreign vs. domestic) are involved, and what elections have been made by the passthrough. This course will walk you through the many things to navigate to ensure your compliance with California franchise tax for passthrough entities.

Publication Date: March 2019

Designed For
CPAs in public practice or in industry who advise on or are responsible for California franchise tax compliance for passthrough entities.

Topics Covered

• General Issues: Withholding requirements, Forms to file, and Withholding exemptions and waivers
• S Corporations
• LLCs — Multi” and Single”Member
• Partnerships — General and Limited
• Composite Filing
• The impact of the Swart Enterprises case to avoid filing in California

Learning Objectives

• Identify how to timely handle necessary California tax remittances for passthrough entities
• Recognize available elections to simplify tax filings and minimize cash flow difficulties
• Recognize how to communicate with nonresident members about why taxes are being paid in certain ways
• Describe what would suggest that an entity has sufficient nexus with California
• Identify which Form is a Nonresident Withholding Allocation Worksheet
• Recognize how many days prior to a distribution payment Form 588 should be filed and the requirements
• Describe which taxes must be prepaid by the 15th day of the 4th month after the beginning of the tax year
• Identify when the Limited Liability Company Fee due to California
• Differentiate Supreme Court cases and how they apply to your clients
• Recognize the minimum franchise tax amount for entities doing business in, or deriving income from sources in, California
• Describe the maximum withholding rate applicable to foreign non-resident owners of corporations
• Differentiate Form used for California Tax returns
• Identify what was issued by the Franchise Tax Board to provide guidance with respect to composite returns for nonresident owners

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
A basic understanding of California tax.

Advance Preparation
None