California source income in S Corp and C Corp

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated) 

Yahoo!   Google   Windows Live   del.icio.us   digg   Netscape

Subject Author Date California source income in S Corp and C Corp removeps-groups@yahoo.com 10-08-2009  Re: California source income in S Corp and C Corp paulthomascpa 10-08-2009
Posted by removeps-groups@yahoo.com on October 8, 2009, 1:10 pm Please log in for more thread options Suppose there is an S corp in California, and the corp has a shareholder in TX. Does the TX shareholder have to file a CA-540NR tax return to report their profits from the S Corp's K1? What if the corp is a C corp? Does the shareholder have to pay CA tax on the distributions reported on the 1099-DIV? I'm guessing the answers are yes and no, but it doesn't quite make sense why S corp income is CA source. We had a recent post about a CA LLC that has rental income, but I know that rental income from houses in CA is CA source income. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by paulthomascpa on October 8, 2009, 1:36 pm Please log in for more thread options > Suppose there is an S corp in California, and the corp has a > shareholder in TX. Does the TX shareholder have to file a CA-540NR > tax return to report their profits from the S Corp's K1? "S" profits, yes. > What if the corp is a C corp? Does the shareholder have to pay CA tax > on the distributions reported on the 1099-DIV? Dividends, no. > I'm guessing the answers are yes and no, but it doesn't quite make > sense why S corp income is CA source. > > We had a recent post about a CA LLC that has rental income, but I know > that rental income from houses in CA is CA source income. The business activity is what sources the income. Profits on that activity are passed through, so is the nexus to file and pay CA tax. Dividends are not activity. I have no clue where GE makes it's money, and it's already been taxed to GE by that jurisdiction. -- Paul Thomas, CPA www.paulthomascpa.com -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted S-Corp income from another state for California resident April 5, 2007, 2:08 am California C Corp taxes ...pls help December 25, 2006, 10:10 pm How does one terminate a California C Corp ? May 15, 2008, 3:07 pm Notes Payable to S-Corp shareholder left after corp dissolution March 17, 2008, 11:13 pm C corp sale of depreciated assets to related S corp December 20, 2006, 1:07 am S-Corp income reporting December 8, 2006, 2:26 am Taxes : S-Corp or C-Corp . How different? May 31, 2007, 12:58 am when are dividends "source income"? June 8, 2006, 2:42 pm Calif. source income May 30, 2009, 10:57 am S CORP August 30, 2007, 5:07 am