I am filling my California 568 Form and I dont know what it means by California Income. My total Income for taxable year 2012 was over 3,000,000 USD. and my company is registered in California. Our company sells services, Such as Internet bandwidth but only to companies out of California. However my Bank is located in California and all the funds have been deposited in my California Bank account. Since all of my 3,000,000 USD income came from companies located out of California, Then I should put Total California Income: $0
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Thank you for your answer. My Total income for the year of 2012 has been 4,737,445 USD. I have filed both Federal and State income tax. My question is regarding California Form 568 (Limited Liability Company Return of income) n this form there is a clause saying that: " Use only amounts that are from sources derived from or attributable to California"
The type of service that I sell is not tangible and I sell my product to Companies out of California and even Telecommunications out of United States. None of my income has been to any California based company. However every company either In US or out of US have deposited the fund into my California Bank account.
If the income are not from the sources in California, Then Can i write in front of the question: Total California income: $0?
Thank you for your reply.
One last question: On my Federal 1040 Return schedule C form Part 1 it states that "Gross receipts or sales = 4,737,445 USD.
Now based on the information that I got from you, I need to put my total California Income on California Form 568 (Limited Liability Company Return of Income) a 0$?
Wouldn't they be surprised?
I sell to out of country companies as well. Also whatever I sell is an Internet services to COmpanies like Verizon and AT&T and Sprint. None of them are registered in California. I cannt get Schedule C from AT&T or for example British Telecom in Britain does not have Schedule c at all.
What do you suggest?
In order to support the $0 California taxable sale position, you might consider presenting a reconciling schedule that shows your worldwide sales, and the tax jurisdictions you report in, to support your contention that you have $0 CA sales. Sales in foreign countries are generally exempted from state taxation, as they are agreed to be taxed in the country of origin. Each will be different, and should be reviewed as part of your overall tax strategies.
Your business is housed in an LLC. You did not mention if you were the sole owner, or where you are resident. Your state of residence may require treatment of your LLC income as income of that state. If you are a CA resident, the discussion of just the LLC sales may be moot, as California wants to tax residents on their worldwide income, subject to resident tax credits and perhaps foreign tax credits as applicable.
Your question about $0 taxable sales for the LLC may still be correct, but your CA resident income tax return would have to report all the income worldwide.
I know that goes beyond what your question was, but if you are the 100% owner of the LLC, that is a disregarded entity for many jurisdictions.
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