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I have a Florida corporation. I used a mailing address in…

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Hi, I have a Florida corporation...
Hi,
I have a Florida corporation. I used a mailing address in California and have a bank account with the Bank of America opened at a California branch in 2015.
Now the California state demand us to file a 2015 return. But we did no have any business or any income from California at all.
the only business is rental income from a property in Florida.
I need to talk to a California or Florida Tax lawyer / accountant on how to resolve this issue for good. Thanks.
I am looking for a Tax Accountant/ Tax lawyer. Expert, please advise me you are accountant or lawyer in what state. thanks
Submitted: 8 months ago.Category: Tax
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Answered in 4 hours by:
10/3/2017
Tax Professional: James Daloisio, Tax Attorney replied 8 months ago
James Daloisio
James Daloisio, Tax Attorney
Category: Tax
Satisfied Customers: 608
Experience: 24 years of continuing education and experience.
Verified

Hi, my name is ***** ***** welcome to Just Answer. I'm an attorney licensed in the state of California.

To properly analyze your issue I need to know your California residency status for 2015. Were you a resident, part year resident, or non resident?

It is not unusual for the state of California to send demands for tax returns to individuals who appear to have some financial connection to the state, such as receiving interest from a bank account, having a professional license, etc. irrespective of whether they made any money there. Depending upon your status, you should submit the appropriate tax return or send back the form that indicates why no return is required.

If you were a resident, you were required to file a tax return if your income from all sources exceeded the threshold amounts for that year; here's the threshold amounts for 2016 just to give you an idea: https://www.ftb.ca.gov/forms/2016-California-Tax-Rates-and-Exemptions.shtml#ifr

If you were a part year resident, your taxable income would consist of income from all sources while you were a resident, plus California source income as a non resident.

If you were a non-resident you would only have taxable income if you had California source income AND your income from all sources exceeded the threshold amount for filing.

In any event, it is imperative that you respond to that demand within the applicable period of time that is indicated. If you need more time to respond, then go to this website, enter your notice number, and indicate how much time you need: https://webapp.ftb.ca.gov/inc/

That's it. I cannot stress the importance of making a timely response to your notice or requesting more time. If you do not have the notice number or cannot make the request online you can call the FTB and request an extension at(###) ###-####

Hope that answered your question. If so a positive rating would be appreciated. Thank you for using Just Answer!

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Customer reply replied 8 months ago
Hi James,
Thank you for responding to my question. I am asking the question for the Florida corporation which has a mailing address in California, and mistakenly open a bank account at the BOA branch in California. That 's why we have a demand to file the return. What I need to know how to resolve this situation. As there is no income or asset in California, how do I fill out the California. Franchise income tax return. Do I have to report Florida asset on the California return? Do I have to report the rental income on the California return? Probably what I need is to speak to an accountant who know how to file the franchise tax return. Please advise or refer me to the right expert. Thanks.
Customer reply replied 8 months ago
I need an expert who can show me how to fill out inlines on the Cali return. It has to be clear that the Florida Corporation has no income and no asset and no business activities , but a almost empty bank account in California. Also How to resolve the issue for good in the subsequent years. Thanks.
Customer reply replied 8 months ago
The Corporation has 2 shareholders. One shareholder is living in California, and the other shareholder is living in Florida and outside of California. This is additional info for the situation. thanks.
Tax Professional: James Daloisio, Tax Attorney replied 8 months ago

Okay, now I see your situation. You do not appear to have a filing requirement.

1. Your corporation has no California source income;

2. Your corporation is not doing business in California;

3. Your corporation is not organized in California

4. Your corporation is not registered with the California Secretary of State.

Therefore, you are not required to file Form 100, California Corporation Franchise or Income Tax Return, nor are you required to pay the annual minimum franchise tax of $800.

Before you undertake to file a tax return you should contact the Franchise Tax Board and provide them with the above information. Try their general number at(###) ###-####to get started. We aren't allowed to refer customers to other professionals here but there is no shortage of competent preparers to take care of a situation like this one. It seems your corporation has no reportable transactions/income in California so it'd be a pretty quick return!

But communicate with them first. They need to understand that you aren't filing because you do not have a filing requirement.

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Customer reply replied 8 months ago
Hi Jim,
I just spoke to the Filing Compliance bureau as you suggested. They said because there is a shareholder currently residing in California; therefore the corporation has to file the required return. Could you please advise what I need to do to resolve the issue? What type of income do I have to report on the form 100? Could you please just give accountant names who have dealt with this issue before? Thanks
Tax Professional: James Daloisio, Tax Attorney replied 8 months ago

Hi again,

1) While we're not allowed to make referrals, you can go to the National Association of Enrolled Agents for the Los Angeles area and find a competent business tax professional. Here's the site: http://taxexperts.naea.org/listing/location/united-states/california

2) the state of California has a funny statute that defines "doing business." If your corporation is "doing business" in California, then it is required to file a corporate tax return and pay the $800 franchise tax. If you are an out of state corporation with no physical presence, i.e., office, in the state, and do not transact any business, i.e., no sales activity or transactions "for the purpose of pecuniary gain or profit," you might still be considered doing business IF:

(A) the corporation had California sales that exceeded $536,446.00 OR exceeded 25% of its total sales for the year; OR, (B) Real and tangible personal property of the corporation in California exceed the lesser of $53,644.00 or 25 percent of the taxpayer's total real and tangible personal property. The corporation has to own the property, not its shareholder(s); OR (C) the corporation paid compensation in California in an amount more than $53,644.00 or more than 25% of the total compensation paid for the year. All of this information may be found in CA Revenue and Taxation Code Section 23101.

If your corporation does not meet any of these requirements, it does not have a filing requirement. At this point it may in fact be easier for you to just file a tax return. I'm sure you'll find a competent individual with the link I've provided.

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Customer reply replied 8 months ago
I have a very specific question on how to resolve the issue, but based on your answers, I do not see any solution to resolve this issue. I think I need to speak to a tax accountant who can guild me to fill out the 100 form to clearly indicate that I have no income source and no asset in California.
Tax Professional: James Daloisio, Tax Attorney replied 8 months ago

Got it. I was trying to save you the cost of having the return prepared. I'm going to opt out here and open up your question. Thanks.

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Customer reply replied 8 months ago
Hi Expert,
I need help from an accountant/ expert in filing the Form 100 California State return to end the filing requirement from the Cali Franchise board. We are a Florida Corporation, but happened to have a mailing address in California and a bank account mistakenly opened at a California branch office without any interest. We absolutely has no income source or any business in California.
Please show me the steps that I need to do in order to completely resolve this issue for good. Thanks.
Tax Professional: Amanda Russell,
 replied 8 months ago
Amanda Russell
Category: Tax
Satisfied Customers: 14
Experience: Accounting & Tax Educator at Self-Employed/Ut Du LLC
Verified

I am an EA (tax) and experienced with CA.

If your corporation has a mailing address in CA, then you have nexus (state has the right to tax you) and things get complicated (CA is the most complex state tax system - as you can see in James' responses).

If you just want to know how you tell the state you have no activity; you put $0s on the form.

If your bank account has transactions going in and out, then be sure you have your accounting records and documentation for why you don't have nexus. Let me know if you have follow up questions.

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