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LLC Tax Questions

February 10, 2017 • Anonymous • Log In to Post Comments

Facts: Husband and wife are California residents and form an LLC that owns residential rental properties all OUTSIDE the state of California. 


Questions: Can they form the LLC say in the state of Nevada, since none of the properties are in the state of CA?  I am thinking the state of CA will say they need to file a CA LLC return, because they are CA residents and manage the LLCs from CA.  Do you agree?


Facts: Client and his ex-wife are equal partners in their LLC.  The LLC owns four commercial buildings in CA, a gas station in Utah, and a gas station/convenience mart in Indiana.  Total gross receipts from all six of those properties is now approaching $1 million.  So their CA LLC Fee would go from $2,500 to $6,000 (not to mention the $800 LLC tax).


Questions: Would it be advisable to form a separate LLC for the Indiana property and a separate LLC for the Utah property?  Then we can leave the four CA buildings in the original LLC.  Aside from the cost of filing 3 federal returns with those respective states, can this be possible given the two partners are both CA residents?

Thanks in advance!



Yes, to your first question....they will be required to file an LLC return if the members are CA residents. As ot the second question the fee is only based on income attributable to California, so the receipts from the out of state properties are not included in calculating the fee. Given that  I don't see the need to set up the other LLCs (which would result in having to pay two more $800 LLC taxes).


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