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FTB announces 2017 economic nexus threshold amounts

August 29, 2017

For the 2017 tax year, an out-of-state  business entity is considered to be doing business in California during the year if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California, or if, for the 2017 taxable year, it satisfies one of these economic nexus threshold tests:

  • The entity is organized or commercially domiciled in California;
  • The entity’s California sales, including sales by an agent or independent contractor, exceed the lesser of $561,951 ($547,711 for 2016) or 25% of the corporation’s total sales;
  • The entity’s California real property and tangible personal property (valued at their original costs) exceed the lesser of $56,195 ($54,771 for 2016) or 25% of the corporation’s total real property and tangible personal property; or
  • The amount paid in California by the entity for compensation exceeds the lesser of $56,195 ($54,771 for 2016) or 25% of the total compensation paid by the taxpayer. (R&TC §23101)

These rules apply to out-of-state corporations, LLCs, and partnerships.

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