Discussion:CA LLC Confusion
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Discussion Forum Index --> Basic Tax Questions --> CA LLC Confusion
Discussion Forum Index --> Tax Questions --> CA LLC Confusion
Dsiclients (talk|edits) said: | 14 March 2008 |
| Any help would be greatly appreciated on this subject. For purposes of this question, assume this is a disregarded entity...a SMLLC in CA.
CA will be looking for a form 568. O.K., no problem so far. The IRS will be looking for income and expenses to be reported on the individual's 1040, either on Sch's C, E, of F. Again, no problem. However, will CA also be looking for income and expenses on the indidual's CA form 540? Or is it simply all reported on the form 568 and that's that? | |
Michaelstar (talk|edits) said: | 14 March 2008 |
| Yes, because this is a SMLLC, the income (loss) from the activity is reported on the 1040/540 where the income tax is paid. There will not be an adjustment on the Form CA for the net income (loss) for the activity. There may be an adjustment for the Fed/CA differences.
On the 568, the $800 minimum tax and LLC fee (if any) is paid. | |
| 14 March 2008 | |
| Note also on the 568 that the taxpayer must sign in 2 places - one for the return, and the other to consent to CA jurisdiction and to file the appropriate returns. | |
Dsiclients (talk|edits) said: | 14 March 2008 |
| Just for clarification. CA is picking up taxes from the LLC 568 ($800), AND they want the taxpayer to pay additional taxes on the same income on their individual form 540? | |
Michaelstar (talk|edits) said: | 14 March 2008 |
| The $800 minimum tax on the CA568 is for the privilage of doing business in the State of CA. This $800 tax has no relationship to the income tax to be paid by the t/p on their 540 so - no - the t/p is not paying additional taxes on the same income.
I know this may sound weird but that is just the way the system works. | |
| 14 March 2008 | |
| Here's a question. Is the $800 deductible on the federal Sch C? Off course if so, it would have to be backed out on the 540 Sch CA. | |
Michaelstar (talk|edits) said: | 14 March 2008 |
| Kendrick - correct. If there is an LLC fee in addition - that is deductible for both Federal and CA tax purposes. | |
