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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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My friend has an LLC which he formed but never used and

Customer Question

my friend has an LLC which he formed but never used and never paid the FTB their 800 for the past two years. doe s the same protection against personal tax liability apply to abandoning and LLC in California as it does for corporations?
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Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.

the California franchise tax ($800 minimum) is due for EACH year the LLC was in existence.

That is a responsibility of the LLC - not a responsibility of the owner.

Expert:  Lev replied 6 months ago.

So if the LLC is abandoned - the owner may not be held responsible.

However - If the owner - who is an officer in charge of LLC operation took any distributions from the LLC or used the money for some unrelated purposes instead of paying tax liability - IN THIS CASE the owner may be held responsible.

But if the LLC was never funded - the owner is protected from LLC debts.

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Customer: replied 6 months ago.
My friend wanted to know since a bank account was set up and bank charges were taken. The account was closed and the few remaining dollars in it, about $100, were transferred to his personal account. does that count as a distribution subjecting him to personal liability. There was no other activity
Expert:  Lev replied 6 months ago.

Yes - that is treated exactly as distribution.

Actually - $100 were owned by the LLC.

Your friend as a manager of the LLC should use that amount to pay LLC's tax liability.

Instead - he just pocket that amount himself.

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