CA Schedule R, Apportioning or allocating income

[unk045]

Hello,

I have an online business that is a single member LLC with $85 in income for the 2021 taxable year and $1659 in expenses. I had 1 online sale to California and 1 online sale to Texas.

CA tax form 568 is asking - Is this LLC apportioning or allocating income to California using Schedule R? 

I'm not sure how I'm supposed to be answering this question. Can someone please assist? A speedy response will be much appreciated as I just learned that I have to file form 568 by March 15th.

Thank you in advance. 

[MaryK4]

The question is asking if you are allocating the business income.  In California unless you are a QBA 

(QBAs include agricultural, extractive, savings and loan, or banking or financial) you apportion using your sales income by dividing the total sales in California by the total sales and multipling the result by 100. 

All trade or businesses, except those that derive more than 50% of their gross receipts from qualified business activities (QBA), must apportion their business income to California using a single-sales factor. 

Single-Sales Factor Formula - R&TC Section 25128.7 requires all business income of an apportioning trade or business, other than an apportioning trade or business under R&TC Section 25128(b), to apportion its business income to California by multiplying the business income by the sales factor.

See Apportionment and allocation.

[unk045]

Thanks @MaryK4 but I'm still not sure I'm following. I have an online based ecommerce business. Based on my post, do you know if this is something I would answer 'yes' or 'no' to?

[MaryK4]

Yes, because you are selling things, you must use the single sales formula.  (Sorry I juts re-read my answer and said "Wow, that was too technical.")   @unk045

[unk045]

If I say yes, then I would need to fill out schedule R. I'm not sure how to complete schedule R. Do you have any insight on filing it out based on my post? 

[RobertB4444]

@unk045  Your apportionment ratio looks like this - You sold $85 worth of stuff.  If you sold $50 in California you will take 50 and divide by 85.  That equals .588 or 58.8%.  That's your ratio.  (You need to replace the 50 I put there with what your actual California sales were).  Use that on schedule R and you're all set.

[Sam Hopi]

I have read your answer but I confused that if I have online shop(Amazon ....) and sold things all around the U.S.  should I calculate how much my sales was for each state under the LLC single member and file schedule R?

Thanks for your support.

[ZhuoliA]

No, you should calculate your CA sales and divide that by your total sales to derive the percentage to use to apportion your income and expenses to file Schedule R.

If you review @MaryK1101's posts, you can see the details of this specific rule for this calculation. 

@Sam Hopi

[Nath4]

What would be the case for a single member LLC that only sold services not products.