"The Rainmaker" <Brigadoon_8[at]nospamjuno.com> wrote:

- quote -

Yes, same question but a little more detailed.

- quote -

It does not matter where the LLC is organized. If you are
California residents, you will pay tax to California on all
of your income from the LLC, regardless of where the
property is located.

You are correct that you will also file individual income
tax returns (and information returns for the LLC) in each
state where the LLC owns property. California will allow
you credit for the tax you pay to the other states, limited
to the proportion of your California tax liability that
relates to that "double taxed" income. Arizona is an
exception; Arizona will allow you credit for the California
tax you pay on your Arizona source income.

- quote -

No. The LLC is not subject to a measured tax (unless you
"check the box" to have it taxed as a C corporation, see my
response to your duplicate question). It is subject to the
$800 minimum tax and the LLC fee, which is imposed on a
sliding scale based on total gross receipts (from all
sources). If the LLC is organized in Nevada, and has
California properties (or you and your partner conduct its
business in California), it will be required to register
with the California Secretary of State as a foreign LLC and
pay the minimum tax and the fee.

As stated above, as California residents you and your
partner will be subject to California tax on all of your
income flowing through from the LLC, regardless of the
location of the properties. Residents are taxable on all
income, regardless of source.

There is no state income tax benefit to organizing an LLC in
Nevada as opposed to California, unless the LLC does NO
business in California. An LLC organized in California that
had no California property or business activities would be
subject to the $800 minimum tax and the fee; if it were
organized in Nevada or some other state, it would not be
subject to those charges, which of course you wouldn't want
to volunteer for. California resident members would still
be taxable on all of the flowthrough income, however.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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My apologies if this appears as a duplicate post.

My partner and I have agreed to form an LLC to buy and sell
investment real estate in several states (including
California).

We are both California residents. If we form a domestic LLC
in California, will we pay California state tax on rental
income, and gain on conversion for each property, regardless
of which state that property is in? I presume we will file
a state return for each state in which we own property, but
will we pay tax in California for property owned in Arizona
or Colorado?

Further, if we form our LLC in Nevada and register in
California as a foreign LLC, will we only pay income and
gain to California on the California properties?

Thanks in advance.

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