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Apprtionment Nevada Corp

January 24, 2017 • Anonymous • Log In to Post Comments

I have a Nevada S-Corp that provides legal services. It does provide legal services to California clients, but all of the work is performed in Nevada and the sole shareholder is a Nevada resident. 

If the corp does not meet any of the conditions of Doing Business in California, then are they NOT required to file a California tax return, correct? They are not required to file and apportion California source income unless they first meet the conditions of Doing Business in California.

Thank you.


They are doing business in CA under market based sourcing rules and must register in CA and file returns apportioning income to CA based on the fees from CA clients.

So their is no minimum that must be first met. If they have total gross receipts of $100,000 and they earned $2,000 from a California client, then they are required to file in CA and apportion?

Cynthia, if there only connection to CA is $2,000 from feesin California out of  $100,000 in gross receipts they would not be considered to be "doing business" under R&TC Sec. 23101(b). Remember you also have to make sure that they do not qualify as "doing business" under R&TC Sec. 23101(a) which states that doing business means "means actively engaging in any transaction for the purpose of financial or pecuniary gain or profit."   So for instance they shouldn't be actively pursuing California clients.. 

If they do not qualify as "doing business" under either provision, they would still be required to file a corporate income tax (not the $800 miniimum franchise tax) and pay tax on any California source income. (R&TC Sec. 23501)


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