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Level 2

Does a partnership (multi-member LLC) have to pay the $800 tax to California on its final return?

If a partnership dissolved mid-year 2019 and had only expenses in the final year (no income), must it still pay the $800 CA tax to the Franchise Tax Board? 

 

If so, is the tax deducted from each partner's basis prior to dispersion of all final funds according to their percentage, ultimately leaving all partners with a basis of $0?

 

As an example, four 25%-partners each have a $1,000 basis left after all other itemized 2019 expenses.  They each lose $200 to the CA tax and receive a $800 distribution, leaving them all with $0 basis on their K-1.

4 Replies
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Level 15

Does a partnership (multi-member LLC) have to pay the $800 tax to California on its final return?

Level 2

Does a partnership (multi-member LLC) have to pay the $800 tax to California on its final return?

@tagteam Thanks, but I'm getting the following error when I select that link: 

"The message you are trying to access is not available."  Are there any posts that I can still view?

Level 9

Does a partnership (multi-member LLC) have to pay the $800 tax to California on its final return?

I can't access that link either.

However, a franchise tax is known as a "tax for the privilege of doing business" in a particular state.

In California their minimum franchise fee is $800.  This was technically due by April 15th and if not paid, is late.

So to answer your question, the $800 is due in full; no proration in your final year.

Here is a link to the California Franchise Tax Board with some commentary that you may find helpful.

https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html

You need to make sure you contact both the Secretary of State and the Franchise Tax Board in order to cancel your California registration.  If you don't do that before the end of the year, you will then owe another $800 for 2020; technically.

Level 15

Does a partnership (multi-member LLC) have to pay the $800 tax to California on its final return?


@NewToPartnerships wrote:

@tagteam Thanks, but I'm getting the following error when I select that link: 


I apologize for that. The link worked when I posted it; I have no idea what happened in the interim. Regardless, it appears @Rick19744 answered your question; you really have no choice other than to pay the $800 at this point.