Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

We are residents of California with a sole proprietorship…

Customer Question
We are residents of California...
We are residents of California with a sole proprietorship filing a schedule C.1) Our current business is a sole proprietorship in California. We sell about 50% of our annual sales through Amazon FBA and the other half is wholesale to brick and mortar stores around the country. Would it be advantageous to transfer the current business to a Wyoming corporation? We don't need the income for personal expenses.2) We are introducing a new line of products for sale on Amazon.com. This will be a separate business from our current Amazon business. We are considering opening a corporation (probably an LLC) in Wyoming for the new business. The purpose of the corporation is to not subject our sales and profits to some California sales taxes, personal state income tax, potentially high tax brackets, etc. We anticipate higher earnings than previous years and our personal expenses have been greatly reduced since the kids moved out and we sold our house. We do not need much salary from the corporation, since we are currently earning about $9,000 per month on investment interest and rental income that is apart from our regular business.3) We currently receive all inventory at our warehouse in Richmond, California. For future deliveries, we have the option of directing the incoming shipping containers from Asia to be forwarded directly to the Amazon warehouses, bypassing our warehouse in California. As we don't want the new Wyoming business or ourselves to be liable for California taxes, is it necessary to bypass our California warehouse? Is there anything else that we also need to do?4) We are considering living abroad for more than six months per year starting in 2018. Would this be an advantage that would give us greater deductions/exemptions?5) We have a rental property that could also be transferred to be a Wyoming corporation. Would this be advantageous to us in terms of taxes?
Submitted: 4 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 18 minutes by:
11/30/2017
Tax Professional: Lev, Tax Advisor replied 4 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,699
Experience: Taxes, Immigration, Labor Relations
Verified

Would it be advantageous to transfer the current business to a Wyoming corporation?

As long as you run business activity from CA - that Wyoming corporation will be considered as a foreign entity conducting business within the state of California.

As such it will have to be registered and pay additional franchise tax.

You personally will be more protected from any liability of that Wyoming corporation - but tax wise - you will likely not have any advantages because the corporation will be responsible for federal and CA stat income taxes.

The purpose of the corporation is to not subject our sales and profits to some California sales taxes, personal state income tax, potentially high tax brackets, etc.

Based on your information - the corporation legally will be obligated to register in California and will be liable for CA sales taxes.

You still may potentially save on individual income taxes as long as there will not be any wages paid to you personally or little wages - but the corporation will pay corporate income taxes instead.

Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 4 months ago

As we don't want the new Wyoming business or ourselves to be liable for California taxes, is it necessary to bypass our California warehouse?

I do not think that will make any difference because legally - you still will have nexus in California based on your residency.

Correspondingly - you will run corporation out of your CA location - and that will create the CA nexus for the corporation.

Having or using the warehouse is only one accept in determination of the nexus.

So far - it will be required to collect sales tax on sales in California and will not be responsible top collect sales taxes from sales shipped to customers to other states where the corporation doesn't have a nexus.

We are considering living abroad for more than six months per year starting in 2018. Would this be an advantage that would give us greater deductions/exemptions

If you travel for business - you might be able to deduct travel expenses.

But if the travel reason is personal - deduction would not be allowed.

In additional - you will need to verify a local law in the country you will reside.

If you pay any foreign taxes - you might be able to claim a credit when the same income is taxes in the US and abroad - thus effectively will avoid double taxation.

We have a rental property that could also be transferred to be a Wyoming corporation. Would this be advantageous to us in terms of taxes

If that rental property is located in California - any rental income will be considered from CA sources and will be taxable for this state regardless where the owner woudl be a resident.

If that rental property is NOT located ion California - rental income realized by the Wyoming corporation will NOT be from CA sources and will not be taxed by that state.

Let me know if you need any clarification this matter.

Ask Your Own Tax Question
Was this answer helpful?
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,699
32,699 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,451 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

56 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,124 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
Mother-in-law wants to sell a rental property that sustained
Mother-in-law wants to sell a rental property that sustained severe fire damage. One of 3 houses on the lot is a total loss. There is an interested buyer, but we are unsure what the value of the prope… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
A quick? Received a notice of credit for income tax
Good afternoon. A quick ? Received a notice of credit for income tax purposes. Notice says if we declared amt of disability as income on prior years taxes. And we did. We now can show that as an. Offs… read more
Dr Arthur Rubin
Dr Arthur Rubin
Doctoral Degree
24 satisfied customers
I want to use TurboTax to compute federal income tax and
I want to use TurboTax to compute federal income tax and FICA tax for a hypothetical taxpayer for her 2018 tax year. Under the 2017 tax reform act, she won't have personal deductions and her standard … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,943 satisfied customers
I live in state and would like to take a sales tax deduction
I live in Washington state and would like to take a sales tax deduction (made a major purchase). My local sales tax is 10.10%. I paid 10.30% taxes on the boat in another town in state. I'm filing 1040… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,943 satisfied customers
If a person did not file income tax for 4 years and then
If a person did not file income tax for 4 years and then passed away, can the taxes be legally filed after death? … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,451 satisfied customers
Can I deduct the sales tax, registration fees on my schedule
Can I deduct the sales tax, registration fees on my schedule C is I use my truck for business and personal use? … read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
828 satisfied customers
I am completing my moms federal income tax forms for 2017.
I am completing my moms federal income tax forms for 2017. Mom (who is 90) purchased a vacant lot in June of 2012 and sold it at a profit of $23,7550 in November of 2017. Moms adjusted gross income fo… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,066 satisfied customers
A couple is filing their 2017 PA-40 personal income tax
A couple is filing their 2017 PA-40 personal income tax return. They had their first child in 2017. The father sets up a 529 account titled in his name fbo the child. The father contributes 14k into t… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,066 satisfied customers
Can airfare be deducted for a schedule e rental property if
Can airfare be deducted for a schedule e rental property if it was to go and perform maintenance on the property? If so where on schedule e should it be deducted?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Sales tax and income tax question .... I have some online
sales tax and income tax question .... I have some online businesses .. sell digital products and services .. thus far no need for a sales and use tax id ... however, i'm considering selling some tang… read more
Lev
Lev
Tax Advisor
32,699 satisfied customers
Iowa Income Tax. Is 100% of capital gains on the sale of a
Iowa Income Tax. Is 100% of capital gains on the sale of a rental property deductible if the requirement is met for hours spent for management of the property? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,943 satisfied customers
IN DOING MY 2017 FEDERAL & STATE OF COLORADO INCOME TAX
IN DOING MY 2017 FEDERAL & STATE OF COLORADO INCOME TAX RETURNS, I DISCOVERED THAT I HAD OMITTED FORM SSA-1099 INCOME FOR THE YEARS 2014, 2015, AND 2016. Do I need to file amended income tax forms for… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
Can a married LLC Partnership file schedule C on their 1040
Can a married LLC Partnership file schedule C on their 1040 with their W2 income? And if so if they fie separate sch C how do they go about it? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,943 satisfied customers
California Franchise Tax Board Corp Business Entity
California Franchise Tax Board Corp Business Entity Collections. Just filed 2015 & 2016 form 100, but they haven't been processed yet. They have filed a lien as they imputed the corporation's tax liab… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,943 satisfied customers
Are there federal or California tax credits for installing a
Second opinion] Are there federal or California tax credits for installing a new furnace, A/C system and attic and wall insulation?… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
How do you calculate the state income tax, the local income
Hello, how do you calculate the state income tax, the local income tax, and the federal income tax withheld? For the local income tax, do just multiply the state wages by the county tax rate? For exam… read more
Lev
Lev
Tax Advisor
32,699 satisfied customers
This is an income tax question. I am thinking of Deducting
This is an income tax question. I am thinking of Deducting next years giving to church this year with pending changes to tax law. As I recall, higher income levels reduce schedule allowable deductions… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Dose mean can not deduct state income taxes only or dose it
dose mean can not deduct state income taxes only or dose it includes property taxes too … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x