Have a Tax Question? Ask a Tax Expert
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
Pass through taxation is the default taxation of a pass through entity, so there is nothing special you need to do to establish pass through taxation. All you need to do is have your LLC set up.
Is this true in California?
It's true anywhere
I thought I read somewhere that CA makes it a little more complicated.
No, it's the same anywhere. California just has a minimum $800 per year franchise tax on any business
you can't get away from that by being a pass through entity you would still owe the franchise tax
but your income tax would be pass through
So, you still have to file business tax returns in addition to your income tax returns, in California. You can't get around this.
Ah. OK that's the deal. Can the franchise taxes be offset by losses if the LLC is working at a deficit?
No. The franchise tax is a minimum tax
You could lose $1 million and still have to pay the $800
You also have an LLC fee based on your gross receipts, if your gross receipts are in excess of $250,000.
Is there anything else I can assist you with? If not, please rate my response as "excellent" so that I may receive credit for assisting you today?
Ah yes...the gross receipts is also unique to CA right?
Yes, unique to CA as well.
It's a state tax thing. CA likes getting paid :-)
Right. Thank you for you help.