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Legalinfomd
Legalinfomd, Attorney
Category: Business Law
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Experience:  Attorney with 24 years of experience in business law.
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Customer Question

How can I move my existing California LLC electing S-Corp status, to Washington State? If we're an S-Corp, are there tax implications?
Submitted: 3 years ago.
Category: Business Law
Expert:  Legalinfomd replied 3 years ago.

Legalinfomd :

Hello. I will respond to your question.

JACUSTOMER-4l0hb5oe- :

Hi, thanks.

Legalinfomd :

You can physically move your business from one state to another, but the entity cannot be "moved". A California LLC is an entity organized under the laws of that state.

JACUSTOMER-4l0hb5oe- :

In Wyoming & Nevada there is a concept of redomestication or continuance. It seems as though Washington doesn't have that concept.

JACUSTOMER-4l0hb5oe- :

However, they do have a concept of a merger. I'm not sure if we need to create a new one in WA, then merge the old one in, then dissolve in CA.

JACUSTOMER-4l0hb5oe- :

What I'd like to determine, and what I was essentially asking with my question, is would this be the best way to "move" our LLC to Washington, and are there tax implications, if so?

Legalinfomd :

Give me a moment to confirm one thing.

JACUSTOMER-4l0hb5oe- :

Take your time, and thanks for your help.

Legalinfomd :

Sorry for the delay.

JACUSTOMER-4l0hb5oe- :

No problem, I'm working from home.

Legalinfomd :

You are correct. You would form a new Washington entity, and then merge the California company with and into the Washington company. The only tax implications you should have is that the surviving Washington entity will most likely file a Washington State income tax return, but I cannot give tax advice. You will have to consult with an accountant in that regard.

JACUSTOMER-4l0hb5oe- :

Actually, I know the answer to the tax bit. Washington state has no income tax but they do have a B&O tax.

JACUSTOMER-4l0hb5oe- :

I was wondering about the potential liquidation issues when we dissolve the CA LLC.

Legalinfomd :

I hope that this information has been useful. Please leave a positive rating for my response so that I will be compensated for my time. Thank you and good luck.

Legalinfomd :

What in particular do you mean about the liquidation issue.

JACUSTOMER-4l0hb5oe- :

So the LLC owners don't need to report income from the dissolution of the CA LLC?

JACUSTOMER-4l0hb5oe- :

And the merger? There are no forms on the WA website, no articles of merger. How can one merge the company?

Legalinfomd :

You will not be liquidating any assets. You will be dissolving the California enity, after it has been merged with and into the Washington entity. There is no income to the California entity in connection with the merger.

JACUSTOMER-4l0hb5oe- :

So the order of events is: form a new Washington LLC electing S-Corp, then merge the CA LLC, then dissolve the CA LLC?

Legalinfomd :

Correct.

JACUSTOMER-4l0hb5oe- :

I've spent a bunch of time on the SoS WA website, but can't find articles of merger. How is it possible to file a merger? That would be the last information I require to answer this question.

JACUSTOMER-4l0hb5oe- :

Also can we use the same EIN when filing the WA LLC?

Legalinfomd :

No. Each entity must have its own EIN.

Legalinfomd :

You will have to file a separate Form SS-4 for the new entity.

JACUSTOMER-4l0hb5oe- :

Could you link me to that form?

Legalinfomd :

One moment.

Legalinfomd :

The link for that form is http://www.irs.gov/pub/irs-pdf/fss4.pdf.

JACUSTOMER-4l0hb5oe- :

The IRS does indicate that I don't need a new EIN if I move my business (the surviving EIN after a merger is the relevant bit): http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Do-You-Need-a-New-EIN%3F

Legalinfomd :

That is correct.

JACUSTOMER-4l0hb5oe- :

You told me that I do need a new EIN.

JACUSTOMER-4l0hb5oe- :

But the IRS indicates otherwise.

JACUSTOMER-4l0hb5oe- :

Sorry you linked me to the SS-4 EIN form, but I was actually referring to the articles of merger of method of filing a merger in WA.

Legalinfomd :

One moment.

JACUSTOMER-4l0hb5oe- :

That's the form or method I was looking for. The EIN application I'm familiar with as I own an LLC already.

Legalinfomd :

You are correct. The IRS rules provide:


You will not be required to obtain a new EIN if any of the following statements are true.



  • You are a division of a corporation.

  • The surviving corporation uses the existing EIN after a corporate merger.

  • A corporation declares bankruptcy.

  • The corporate name or location changes.

  • A corporation chooses to be taxed as an S corporation.

  • Reorganization of a corporation changes only the identity or place.

  • Conversion at the state level with business structure remaining unchanged.

JACUSTOMER-4l0hb5oe- :

Okay, that makes sense. So I can keep my EIN.

JACUSTOMER-4l0hb5oe- :

So do you think you'd be able to find out how a merger is filed with WA?

JACUSTOMER-4l0hb5oe- :

If not, I can call the Secretary of State.

JACUSTOMER-4l0hb5oe- :

I have a copy of that on my hard drive already.

Legalinfomd :

Then you are all set.

JACUSTOMER-4l0hb5oe- :

That's a form indicating a merger of a Texas corp into a WA LLC.

JACUSTOMER-4l0hb5oe- :

But there is no WA form on that one, only the Texas form.

JACUSTOMER-4l0hb5oe- :

Thanks for your help.

Legalinfomd :

You can use that form to merge an entity of any state into a Washington entity.

JACUSTOMER-4l0hb5oe- :

Which form?

Legalinfomd :

That is a sample of articles of merger filed in Washington State.

JACUSTOMER-4l0hb5oe- :

I don't think that's a form, per se. In fact, I'm pretty sure that's the documented merger of someone else's company (Ecova) posted as an example. The forms in that document are Texas related; the sample merger is not useful, unless you're saying that these documents indicate WA has NO merger forms?

Legalinfomd :

You may change "a Texas limited partnership" to " a California limited liability company"

JACUSTOMER-4l0hb5oe- :

What you're telling me then is that WA has no articles of merger on their website, because there are none?

JACUSTOMER-4l0hb5oe- :

Also this example is on the New Hampshire Public Utilities Commission site. This isn't verified by anything on a WA state website, or CA.

Legalinfomd :

Those articles were accepted for filing by the Secretary of State of Washington. Therefore, the form is acceptable to the Secretary of State. You may use that merely as a form. Type it up the same way, but change the names of the entities and "Texas" to California.

JACUSTOMER-4l0hb5oe- :

But those forms were for a Corporation, and we're an LLC.

JACUSTOMER-4l0hb5oe- :

The reason I mention this is that in those forms they cite a Business Corporation Act

JACUSTOMER-4l0hb5oe- :

and I'm fairly sure the WA legal code mentioned doesn't apply to us, as I've read it.

Legalinfomd :

You cannot use that document word for word. You will merely use it as a form to follow. Unfortunately, there is not a "form" merely with blanks in it that you can fill in. You must type the articles from scratch. I merely provided that as an example. If you are not comfortable preparing the articles on your own, you should engage a lawyer in Washington to prepare the articles for you.

Legalinfomd :

Unfortunately, we are not permitted under the Just Answer guidlines from providing specific legal advice. So I cannot prepare the articles for you.

JACUSTOMER-4l0hb5oe- :

I apologize, but based on the fact that you've offered no substantiation of how the merger should occur except with a Google result I already had, and also provided incorrect information on the EIN, and gave no additional information that was useful to me, I can't consider this okay service. I appreciate your time.

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