Tax News

CCH (cch.taxgroup.com) reports:

For taxable years beginning after 2006, legislative amendments revise the calculation of the annual fee payable by a limited liability company (LLC) organized, doing business, or registered in California so that the fee will be determined on the basis of the LLC's total income from all sources derived from or attributable to the state. "Total income from all sources derived from or attributable to the state" will be determined by applying the existing allocation and apportionment rules for assigning the sales of an entity doing business within and outside the state. The Legislature has stated its intent that no inference be drawn in connection with the legislative amendments for any taxable year beginning before 2007.
Previously, the annual LLC fee was based on an LLC's total income from all sources reportable to the state. "Total income" was defined as gross income from whatever source derived, plus the cost of goods sold that was paid or incurred in connection with a trade or business. However, the law lacked a definition for the term "from all sources reportable to the state." The Franchise Tax Board (FT interpreted this term to mean worldwide total income without apportionment.