Paying $800/yr per LLC in CA for out of state rentals
Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes
Paying $800/yr per LLC in CA for out of state rentals
Most Popular Reply
Chicago Area, IL · Member since 2024 · 54 posts · 49 votes
1yCalifornia mandated that the electric companies move to solar and wind, leaving little money for maintenance, then blame the companies when their poorly maintained power lines spark fires. As if power companies need incentive to avoid maintenance before infrastructure fails.
And California has continued reducing forestry maintenance until they have now completely defunded it. The forestry service said that they weren't able to do 10% of the maintenance needed, like clearing out dead undergrowth, making fire breaks, or controlled burns. And since they are anti-logging, there are no areas being cleared and replanted, or paths created to remote areas, making firefighting even more difficult.
Strange, since cutting down trees for use in products is a great way to capture carbon and make areas available for new growth to capture more carbon. And why do they wait to call in the aircraft that can dump liquids on a fire, until they are out of control? Are they trying to maximize the damage fires cause, so they can blame "Climate Change" for the decisions they make?
Insurance companies are raising prices due to the increases in disasters, then leaving when California and others try to limit their increases. They claim the insurance companies are greedy, but if they don't cover their losses, they will go out of business.
Politics shouldn't invade every aspect of our lives, and it is sad that we need to spend so much time talking about it, but unless we push back, it will continue.
I wonder if California would remain blue, if voter ID was mandated.
Good luck in California, when they finally pass laws that all but prohibit evictions, labeled as renter's rights.
33 Replies
- 1yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1y
Quote from @Michael Plaks:
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California.
I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that? How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.
So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California. - 1yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
California is a wonderful state...
...to keep away from ;)
- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Quote from @Ken M.:
Quote from @Michael Plaks:
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California.
I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that? How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.
So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.
- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1y
Quote from @Marcos De la Cruz:
Quote from @Ken M.:
Quote from @Michael Plaks:
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California.
I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that? How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.
So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.
Unbeknownst to Californians, Florida has great weather, Hawaii has great weather, lots of great weather in Texas, Southern Oregon is generally very nice, South Carolina has great weather, North Carolina has great weather, Georgia has generally very nice weather.
The list goes on.
You might miss the earthquakes and wild fires though. Quote from @Ken M.:
Quote from @Marcos De la Cruz:
Quote from @Ken M.:
Quote from @Michael Plaks:
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California.
I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that? How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.
So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.
Unbeknownst to Californians, Florida has great weather, Hawaii has great weather, lots of great weather in Texas, Southern Oregon is generally very nice, South Carolina has great weather, North Carolina has great weather, Georgia has generally very nice weather.
The list goes on.
You might miss the earthquakes and wild fires though.
Of your list only a few spots in Hawaii can match San Diego’s weather. Earthquakes do not scare me. Unfortunately fires do. Not so much my health but losing valued possessions.
For those that avoid CA, they are ignoring a lot of stats that demonstrate CA has a lot of economic potential. I am all for those that do not see the opportunity. stay away! I do not believe there is a shortage of opportunity but I have gotten a bit less motivated and like the opportunities to be obvious and easy.
Good luck
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1y
Quote from @Dan H.:
Quote from @Ken M.:
Quote from @Marcos De la Cruz:
Quote from @Ken M.:
Quote from @Michael Plaks:
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California.
I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that? How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.
So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.
Unbeknownst to Californians, Florida has great weather, Hawaii has great weather, lots of great weather in Texas, Southern Oregon is generally very nice, South Carolina has great weather, North Carolina has great weather, Georgia has generally very nice weather.
The list goes on.
You might miss the earthquakes and wild fires though.
Of your list only a few spots in Hawaii can match San Diego’s weather. Earthquakes do not scare me. Unfortunately fires do. Not so much my health but losing valued possessions.
For those that avoid CA, they are ignoring a lot of stats that demonstrate CA has a lot of economic potential. I am all for those that do not see the opportunity. stay away! I do not believe there is a shortage of opportunity but I have gotten a bit less motivated and like the opportunities to be obvious and easy.
Good luck
I agree, San Diego is a beautiful area. We prefer Laguna Beach, but that's just a hop, skip and jump away.
I forgot to mention the mudslides.
What concerns me about San Diego, or any beach city in Southern Cal is everything is in the way to get away from the coast. In a major event like a huge earthquake, there are millions of people who want to leave the area at the same time. Looking for shelter, gas, food, safety.
One bridge goes down, the whole thing stops. And no porta potties.
Once they outlaw running out of gas on the freeway, getting into an accident, or overheating waiting for the line to move, then you've got something.
Meanwhile, it takes just one silly nilly to get on the freeway with an empty gas tank and when they run out, you're stuck behind them for good. It takes just one connector bridge to collapse and that route is no longer viable.
and there are very limited evacuation routes
Survival 101, always have an escape route . . . and a backup
and don't drive around silly nilly Southern Californians
Quote from @Ken M.:
Quote from @Dan H.:
Quote from @Ken M.:
Quote from @Marcos De la Cruz:
Quote from @Ken M.:
Quote from @Michael Plaks:
I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?
When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California.
I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that? How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.
So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.
Unbeknownst to Californians, Florida has great weather, Hawaii has great weather, lots of great weather in Texas, Southern Oregon is generally very nice, South Carolina has great weather, North Carolina has great weather, Georgia has generally very nice weather.
The list goes on.
You might miss the earthquakes and wild fires though.
Of your list only a few spots in Hawaii can match San Diego’s weather. Earthquakes do not scare me. Unfortunately fires do. Not so much my health but losing valued possessions.
For those that avoid CA, they are ignoring a lot of stats that demonstrate CA has a lot of economic potential. I am all for those that do not see the opportunity. stay away! I do not believe there is a shortage of opportunity but I have gotten a bit less motivated and like the opportunities to be obvious and easy.
Good luck
I agree, San Diego is a beautiful area. We prefer Laguna Beach, but that's just a hop, skip and jump away.
I forgot to mention the mudslides.
What concerns me about San Diego, or any beach city in Southern Cal is everything is in the way to get away from the coast. In a major event like a huge earthquake, there are millions of people who want to leave the area at the same time. Looking for shelter, gas, food, safety.
One bridge goes down, the whole thing stops. And no porta potties.
Once they outlaw running out of gas on the freeway, getting into an accident, or overheating waiting for the line to move, then you've got something.
Meanwhile, it takes just one silly nilly to get on the freeway with an empty gas tank and when they run out, you're stuck behind them for good. It takes just one connector bridge to collapse and that route is no longer viable.
and there are very limited evacuation routes
Survival 101, always have an escape route . . . and a backup
and don't drive around silly nilly Southern Californians
I would not leave the area for an earthquake but your comments apply for fire also and are legit.
The Witch fire the main Street out of my area was barely moving. This was not a full city evacuation and many more homes have been built since the witch fire without enlarging the roads. It could definitely be a problem. Yet the area continues to build more residences. Bigger apartments, higher density housing, infill development.
~5 years before the witch fire was the even bigger cedar fire (21 years ago). At the time it was I believe the biggest fire in state history. I am unsure it is in the top 10 biggest fires today.
It could be a big problem. My view is it is only a matter of time.
- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
No, he did not. Thanks for the reply.
- Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes1y
I had a flight with a layover in LA last month and the joke was "great since I received a client email while I was here I'm now going to have to file a CA tax return this year".
California's tolerance for when a filing is required is pretty miniscule. Unless someone is providing a clear, cited reason why something wouldn't be required there....assume it is. - Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Yeah, we even pay more for car registration.
- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
I've lived in Houston and McAllen, TX and visited FL. I detest the heat and humidity, so no, in my opinion, those states do not have great weather.
Depends on what you like.
- Chicago Area, IL · Member since 2024 · 54 posts · 49 votes1y
California mandated that the electric companies move to solar and wind, leaving little money for maintenance, then blame the companies when their poorly maintained power lines spark fires. As if power companies need incentive to avoid maintenance before infrastructure fails.
And California has continued reducing forestry maintenance until they have now completely defunded it. The forestry service said that they weren't able to do 10% of the maintenance needed, like clearing out dead undergrowth, making fire breaks, or controlled burns. And since they are anti-logging, there are no areas being cleared and replanted, or paths created to remote areas, making firefighting even more difficult.
Strange, since cutting down trees for use in products is a great way to capture carbon and make areas available for new growth to capture more carbon. And why do they wait to call in the aircraft that can dump liquids on a fire, until they are out of control? Are they trying to maximize the damage fires cause, so they can blame "Climate Change" for the decisions they make?
Insurance companies are raising prices due to the increases in disasters, then leaving when California and others try to limit their increases. They claim the insurance companies are greedy, but if they don't cover their losses, they will go out of business.
Politics shouldn't invade every aspect of our lives, and it is sad that we need to spend so much time talking about it, but unless we push back, it will continue.
I wonder if California would remain blue, if voter ID was mandated.
Good luck in California, when they finally pass laws that all but prohibit evictions, labeled as renter's rights.
- 1yJohn KosterPro MemberInvestor · Valley Village, CA · Member since 2012 · 147 posts · 142 votes
Quote from @Dave Hagen:
California mandated that the electric companies move to solar and wind, leaving little money for maintenance, then blame the companies when their poorly maintained power lines spark fires. As if power companies need incentive to avoid maintenance before infrastructure fails.
And California has continued reducing forestry maintenance until they have now completely defunded it. The forestry service said that they weren't able to do 10% of the maintenance needed, like clearing out dead undergrowth, making fire breaks, or controlled burns. And since they are anti-logging, there are no areas being cleared and replanted, or paths created to remote areas, making firefighting even more difficult.
Strange, since cutting down trees for use in products is a great way to capture carbon and make areas available for new growth to capture more carbon. And why do they wait to call in the aircraft that can dump liquids on a fire, until they are out of control? Are they trying to maximize the damage fires cause, so they can blame "Climate Change" for the decisions they make?
Insurance companies are raising prices due to the increases in disasters, then leaving when California and others try to limit their increases. They claim the insurance companies are greedy, but if they don't cover their losses, they will go out of business.
Politics shouldn't invade every aspect of our lives, and it is sad that we need to spend so much time talking about it, but unless we push back, it will continue.
I wonder if California would remain blue, if voter ID was mandated.
Good luck in California, when they finally pass laws that all but prohibit evictions, labeled as renter's rights.
I'm not sure what California's response to a large fire has to do with a question about paying taxes for an out of state rental in a California LLC, but okay.
On topic, most states make LLCs formed inside their jurisdiction pay taxes on out of state rentals. However, some states, such as Illinois, have pass through taxation where the LLC itself does not pay income tax on its earnings. The income is passed through to the LLC's owners and is required to be reported on their individual income tax returns. California has an $800 minimum tax on LLCs which is different from many states. So whether or not you do any business in the LLC, you have to pay $800 every year to keep the LLC active. I'm not sure about the details of the Wyoming Statutory Trust, but I'm pretty sure you still have to pay the $800, because that fee is on the LLC, not on the assets within the LLC.
As for the half-truths & regurgitated right wing propaganda spurred on by the name "California":
- California power companies are subsidized by the government to invest in solar and wind energy. The mandated ventures into alternative energy is not coming out of their pocket. There are various programs and incentives to encourage the growth of renewable energy, including financial support for utility-scale solar and wind projects, community solar initiatives, and programs to promote Net Energy Metering. Between the subsidies and their ever increasing rates, I'm pretty sure that power companies should be able to cover basic maintenance.
- The California Forestry department (Calfire) is in charge of 31 million acres of privately owned land. They do not patrol the suburban areas where the most devastating fires occur, because those are suburban neighborhoods and not forests. The state of California is an enormous area with vast forests. The Sierra Mountains alone are larger in size than many smaller states, not to mention the San Gabriel, Santa Monica Mountains, etc... To suggest that the Forests could be maintained better, and then there would be less fire is silly. I camp regularly in the forests of California. The roads are well maintained. The forest floors are mostly unmanageable and follow the natural destruction/rejuvenation patterns of nature. If you swept a hundred yards of droppings on a forest floor, by the time you got to the 50th yard you would see new droppings behind you. Do you realize the manpower that would be required to continually "rake the forest floors" as some have suggested? Seriously? There are millions of acres to cover. First of all, that would require taxing and spending, now wouldn't it? And to suggest that maybe they would be in better shape if the state went Red? You think the Republicans, the party of limited government, will raise taxes and hire the enormous amount of manpower required to go over every inch of the forests every day? Get real. It's funny, there is never any talk about Government incompetence in the news when there are wild fires in Wyoming, Arizona or Montana, states which coincidentally also don't rake their forests, because they, like California, also understand things and perceive reality.
- Lost in all the finger pointing and political football throwing after the LA fires, was the fact that it hadn't rained in 8 months and the winds in the canyon areas were 70-100 mph. For those who don't know, LA is dry. It's basically a desert - kind of an important detail. After 8 months without rain, the areas in the canyons were one big tinder box. There was going to be a fire somewhere no matter who was in office. Why did they wait so long to drop water from the air then? Well, helicopters don't exactly perform well in high winds and the military planes that carry larger water loads are an hour away, so even if the planes were summoned the second the first fire started, they wouldn't get there in time to prevent a large spreading, and those planes do not perform well in 100mph winds either. Sorry, I don't think aircraft crashing into the hillside & exploding was the firefighting technique needed at that moment. Fire professionals agree as well. Imagine being a hard working fireman who worked his or her *** off for an entire week in life threatening conditions in a drought ridden desert listening or reading something from someone who lives in an area so humid that it's hard to light a grill without 4 ounces of lighter fluid, talking about how he and his coworkers didn't do enough and they let the fire go, because somebody wanted to further a global warming agenda. Ridiculous.
"Politics shouldn't invade every aspect of our lives, and it is sad that we need to spend so much time talking about it, but unless we push back, it will continue."
- ^^^^^ Hiliarious. The guy who goes on an unprovoked diatribe about the democratic leadership in California's response to wild fires responding to a post about LLC tax laws thinks politics shouldn't invade every aspect of our lives. You answered no questions for the original post and then make a laundry list of things Fox News told you to think about.
Tired of reading "California hate" posts on bigger pockets. I agree, the landlord laws here suck. And there are many other problems, but with any heavily populated state there will be more problems. We have more of everything here. More criminals, more tax cheats, Doctors, Lawyers, janitors etc... People love to talk about how oppressive the California government is and how difficult it is to do business here. But, if that's true, why does the state of California have a GDP that is ranked #5 in the world?
1. U.S
2. China
3. Germany
4. Japan
5. California (if it was a country)
It's true. Look it up. The right wing narrative that all these blue states are a bunch of lazy do nothings who just want to sponge off of the government doesn't really align with economic reality does it? How does a state that is heavily taxed with an oppressive, hard to work with government that is full of lazy do nothings outproduce every state in the country? Hmm. Maybe the millionaire "news anchors" on TV that are paid by the billionaires (many of whom are invested in fossil fuels) who own their stations aren't telling the whole story? No. That couldn't be! Billionaires always seek the truth at the expense of their own self interest. Everybody knows that. Ha. Ahem.
When I first read the GDP stat I assumed that California's high ranking was because of it's size, but then I looked up GDP per capita and California is routinely ranked in the Top 5 GDP per capita in the country as well. And as of 2023 the first 6 GDP per capita states/districts were:
1. D.C
2. New York
3. Massachusetts
4. Washington
5. California
6. Connecticut
That's odd, isn't it? States with heavy taxes & regulations at the top of the list. If anything, it proves that you can legislate environmental regulations, restrictive workplace safety initiatives and still have a productive workforce. The two realities are not as mutually exclusive as some would like us to believe.
One final note - imagine the GDP ranking scores if California wasn't so "burdened" by government? How much further would it dwarf the productivity of the red states? The difference would be laughable. What's the matter red states? All those tax breaks and you still can't outproduce "Marxist California"? Sad.
Be better red states. Be better.
- Happy investing from a California capitalist!
-
- Chicago Area, IL · Member since 2024 · 54 posts · 49 votes1y
Quote from @John Koster:
Quote from @Dave Hagen:
California mandated that the electric companies move to solar and wind, leaving little money for maintenance, then blame the companies when their poorly maintained power lines spark fires. As if power companies need incentive to avoid maintenance before infrastructure fails.
And California has continued reducing forestry maintenance until they have now completely defunded it. The forestry service said that they weren't able to do 10% of the maintenance needed, like clearing out dead undergrowth, making fire breaks, or controlled burns. And since they are anti-logging, there are no areas being cleared and replanted, or paths created to remote areas, making firefighting even more difficult.
Strange, since cutting down trees for use in products is a great way to capture carbon and make areas available for new growth to capture more carbon. And why do they wait to call in the aircraft that can dump liquids on a fire, until they are out of control? Are they trying to maximize the damage fires cause, so they can blame "Climate Change" for the decisions they make?
Insurance companies are raising prices due to the increases in disasters, then leaving when California and others try to limit their increases. They claim the insurance companies are greedy, but if they don't cover their losses, they will go out of business.
Politics shouldn't invade every aspect of our lives, and it is sad that we need to spend so much time talking about it, but unless we push back, it will continue.
I wonder if California would remain blue, if voter ID was mandated.
Good luck in California, when they finally pass laws that all but prohibit evictions, labeled as renter's rights.
I'm not sure what California's response to a large fire has to do with a question about paying taxes for an out of state rental in a California LLC, but okay.
On topic, most states make LLCs formed inside their jurisdiction pay taxes on out of state rentals. However, some states, such as Illinois, have pass through taxation where the LLC itself does not pay income tax on its earnings. The income is passed through to the LLC's owners and is required to be reported on their individual income tax returns. California has an $800 minimum tax on LLCs which is different from many states. So whether or not you do any business in the LLC, you have to pay $800 every year to keep the LLC active. I'm not sure about the details of the Wyoming Statutory Trust, but I'm pretty sure you still have to pay the $800, because that fee is on the LLC, not on the assets within the LLC.
As for the half-truths & regurgitated right wing propaganda spurred on by the name "California":
- California power companies are subsidized by the government to invest in solar and wind energy. The mandated ventures into alternative energy is not coming out of their pocket. There are various programs and incentives to encourage the growth of renewable energy, including financial support for utility-scale solar and wind projects, community solar initiatives, and programs to promote Net Energy Metering. Between the subsidies and their ever increasing rates, I'm pretty sure that power companies should be able to cover basic maintenance.
- The California Forestry department (Calfire) is in charge of 31 million acres of privately owned land. They do not patrol the suburban areas where the most devastating fires occur, because those are suburban neighborhoods and not forests. The state of California is an enormous area with vast forests. The Sierra Mountains alone are larger in size than many smaller states, not to mention the San Gabriel, Santa Monica Mountains, etc... To suggest that the Forests could be maintained better, and then there would be less fire is silly. I camp regularly in the forests of California. The roads are well maintained. The forest floors are mostly unmanageable and follow the natural destruction/rejuvenation patterns of nature. If you swept a hundred yards of droppings on a forest floor, by the time you got to the 50th yard you would see new droppings behind you. Do you realize the manpower that would be required to continually "rake the forest floors" as some have suggested? Seriously? There are millions of acres to cover. First of all, that would require taxing and spending, now wouldn't it? And to suggest that maybe they would be in better shape if the state went Red? You think the Republicans, the party of limited government, will raise taxes and hire the enormous amount of manpower required to go over every inch of the forests every day? Get real. It's funny, there is never any talk about Government incompetence in the news when there are wild fires in Wyoming, Arizona or Montana, states which coincidentally also don't rake their forests, because they, like California, also understand things and perceive reality.
- Lost in all the finger pointing and political football throwing after the LA fires, was the fact that it hadn't rained in 8 months and the winds in the canyon areas were 70-100 mph. For those who don't know, LA is dry. It's basically a desert - kind of an important detail. After 8 months without rain, the areas in the canyons were one big tinder box. There was going to be a fire somewhere no matter who was in office. Why did they wait so long to drop water from the air then? Well, helicopters don't exactly perform well in high winds and the military planes that carry larger water loads are an hour away, so even if the planes were summoned the second the first fire started, they wouldn't get there in time to prevent a large spreading, and those planes do not perform well in 100mph winds either. Sorry, I don't think aircraft crashing into the hillside & exploding was the firefighting technique needed at that moment. Fire professionals agree as well. Imagine being a hard working fireman who worked his or her *** off for an entire week in life threatening conditions in a drought ridden desert listening or reading something from someone who lives in an area so humid that it's hard to light a grill without 4 ounces of lighter fluid, talking about how he and his coworkers didn't do enough and they let the fire go, because somebody wanted to further a global warming agenda. Ridiculous.
"Politics shouldn't invade every aspect of our lives, and it is sad that we need to spend so much time talking about it, but unless we push back, it will continue."
- ^^^^^ Hiliarious. The guy who goes on an unprovoked diatribe about the democratic leadership in California's response to wild fires responding to a post about LLC tax laws thinks politics shouldn't invade every aspect of our lives. You answered no questions for the original post and then make a laundry list of things Fox News told you to think about.
Tired of reading "California hate" posts on bigger pockets. I agree, the landlord laws here suck. And there are many other problems, but with any heavily populated state there will be more problems. We have more of everything here. More criminals, more tax cheats, Doctors, Lawyers, janitors etc... People love to talk about how oppressive the California government is and how difficult it is to do business here. But, if that's true, why does the state of California have a GDP that is ranked #5 in the world?
1. U.S
2. China
3. Germany
4. Japan
5. California (if it was a country)
It's true. Look it up. The right wing narrative that all these blue states are a bunch of lazy do nothings who just want to sponge off of the government doesn't really align with economic reality does it? How does a state that is heavily taxed with an oppressive, hard to work with government that is full of lazy do nothings outproduce every state in the country? Hmm. Maybe the millionaire "news anchors" on TV that are paid by the billionaires (many of whom are invested in fossil fuels) who own their stations aren't telling the whole story? No. That couldn't be! Billionaires always seek the truth at the expense of their own self interest. Everybody knows that. Ha. Ahem.
When I first read the GDP stat I assumed that California's high ranking was because of it's size, but then I looked up GDP per capita and California is routinely ranked in the Top 5 GDP per capita in the country as well. And as of 2023 the first 6 GDP per capita states/districts were:
1. D.C
2. New York
3. Massachusetts
4. Washington
5. California
6. Connecticut
That's odd, isn't it? States with heavy taxes & regulations at the top of the list. If anything, it proves that you can legislate environmental regulations, restrictive workplace safety initiatives and still have a productive workforce. The two realities are not as mutually exclusive as some would like us to believe.
One final note - imagine the GDP ranking scores if California wasn't so "burdened" by government? How much further would it dwarf the productivity of the red states? The difference would be laughable. What's the matter red states? All those tax breaks and you still can't outproduce "Marxist California"? Sad.
Be better red states. Be better.
- Happy investing from a California capitalist!
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My comments were in response to several previous posts talking about fires. Read in the thread sequence it was posted may make more sense. Probably doesn't help being listed right after the original post as the most popular response.
Thank you for calling responses right-wing, and responding with left wing talking points.
I didn't make my comments relevant only to the latest fire, but to previous fires that have been going on for days before they called in the big planes. Surely not all of them had high winds that suddenly disappeared and allowed the planes to assist in the fire fighting.
Subsidies rarely completely cover projects, but are incentives to companies to start projects they otherwise would not consider in the best interests of the company. And the part about companies not doing maintenance because there were demands from the state that shifted their resources to renewable projects came from the companies when the state tried to blame them for the forest fires.
Take your pick who is telling the truth, but California has kept reducing the money available for forestry work, and it is the forestry service that says it must do far more work at fire prevention than the current budget allows. Maybe labeling everything "right wing" has kept you from hearing from sources that may know more than the propagandists. Why are forest fires burning out of control, destroying houses and killing people, where liberals are in charge, and love to blame global warming that doesn't affect the rest of the world in maintaining their forests. Some places far drier are still able to control their forests. Or maybe they just don't have as many people running around starting fires.
California will probably keep running themselves into the ground.
Lets see how that #5 ranking holds as companies and the rich move out. High GDP is also largely due to the fact that nobody would move to California, for a professional job, with the accompanying high taxes if the job didn't also pay more. Higher taxes, higher cost of living, couldn't be sustained without higher pay. But many are finding out how that multi-million dollar house in San Francisco, or LA, is just a few hundred thousand in much of the rest of the country.
And I love how productive those employees are when some are on social media talking about how they get their coffees, check their social media, and usually do about 5 hours of work for their $250k a year. No wonder companies want to keep an eye on them at work and don't like work from home.
And don't put "Proud Capitalist" on a bumper sticker in California. Your car will probably get keyed.
Be better, blue states. Be better.
Hey there!
I am an investor in San Diego and have a few properties in Texas and Louisiana. I can assure you that this is unfortunately not the case. My LLCs are in the states of the properties and California can and DOES tax your world wide wealth. Just make sure you're getting all of the depreciation you can to offset this.
Hope this helps.
- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Quote from @Grant Med:
Hey there!
I am an investor in San Diego and have a few properties in Texas and Louisiana. I can assure you that this is unfortunately not the case. My LLCs are in the states of the properties and California can and DOES tax your world wide wealth. Just make sure you're getting all of the depreciation you can to offset this.
Hope this helps.
Thanks!
- 1yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
California blows in so many ways other than the weather and scenery. We got out of there as soon as we could and moved to Texas. I would ditch the LLCs. Any attorney can pierce them if they really wanted to. Just get extra liability with your insurance and call it good.
- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Quote from @John Morgan:
California blows in so many ways other than the weather and scenery. We got out of there as soon as we could and moved to Texas. I would ditch the LLCs. Any attorney can pierce them if they really wanted to. Just get extra liability with your insurance and call it good.
I must say you're the only investor who has suggested ditching the LLCs.
I'll definitely consider it if I can get better insurance, which is ridiculously expensive.
Thanks for your input.
- Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes1yI'd do a search here on BP for LLCs, and you will likely find dozens who have suggested ditching the LLCs. I personally have never used one, and I know many other investors with substantial assets who do not either. My boss' in-laws owned several million in SD real estate and never had any LLCs that I am aware of, and he also owns several properties with no LLC.
Quote from @Marcos De la Cruz:
I'll definitely consider it if I can get better insurance, which is ridiculously expensive.
Thanks for your input.
I can think of at least 5-10 regular posters here on BP who have suggested to others that they should just get insurance instead of the LLC route. - Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Quote from @Matt Devincenzo:
I'd do a search here on BP for LLCs, and you will likely find dozens who have suggested ditching the LLCs. I personally have never used one, and I know many other investors with substantial assets who do not either. My boss' in-laws owned several million in SD real estate and never had any LLCs that I am aware of, and he also owns several properties with no LLC.Quote from @Marcos De la Cruz:
I'll definitely consider it if I can get better insurance, which is ridiculously expensive.
Thanks for your input.
I can think of at least 5-10 regular posters here on BP who have suggested to others that they should just get insurance instead of the LLC route.That's great advice. I'd save $1600/yr without the LLCs.
Thanks!
- 1yAshish AcharyaBusiness MemberCPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
@Marcos De la Cruz Clint Coons' strategy using out-of-state LLCs held by a Wyoming Statutory Trust (WST) is often marketed to help avoid California's $800/year franchise tax, but in practice, California's Franchise Tax Board (FTB) is very aggressive in enforcing this fee. As a California resident, if you're actively managing or benefiting from an out-of-state LLC—even if it holds out-of-state property—the FTB may still consider that LLC as "doing business in California" and require the annual tax.
While a WST may offer asset protection and privacy benefits, it generally does not exempt you from California’s filing and franchise tax obligations if you're a CA resident. The FTB has challenged similar structures and may assess back taxes and penalties if it views the setup as an attempt to avoid state taxes.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
INVESTOR FRIENDLY CPA®4.9242 Reviews - Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Thanks. This seems to be the popular opinion.
- Attorney · UT · Member since 2025 · 10 posts · 16 votes1y
In 2016, there were two Chief Counsel Rulings by the Franchise Tax Board where they declared, at least in some instances, that business trusts like a Wyoming Statutory Trust, are not considered "corporations" and would therefore not be subject to the minimum franchise tax as defined in CA Rev & Tax Code § 23153. As long as the Wyoming Statutory Trust is taxed as a disregarded entity, it has not triggered the minimum franchise tax for hundreds of our clients who have utilized them successfully. Here is a link to one of the Chief Counsel Rulings
https://www.ftb.ca.gov/tax-pros/law/chief-counsel-rulings/20...- Investor · Huntington Beach, CA · Member since 2022 · 96 posts · 32 votes1y
Quote from @Chris Wade:
In 2016, there were two Chief Counsel Rulings by the Franchise Tax Board where they declared, at least in some instances, that business trusts like a Wyoming Statutory Trust, are not considered "corporations" and would therefore not be subject to the minimum franchise tax as defined in CA Rev & Tax Code § 23153. As long as the Wyoming Statutory Trust is taxed as a disregarded entity, it has not triggered the minimum franchise tax for hundreds of our clients who have utilized them successfully. Here is a link to one of the Chief Counsel Rulings
https://www.ftb.ca.gov/tax-pros/law/chief-counsel-rulings/20...Interesting. Thanks.
- 1yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Quote from @Chris Wade:
In 2016, there were two Chief Counsel Rulings by the Franchise Tax Board where they declared, at least in some instances, that business trusts like a Wyoming Statutory Trust, are not considered "corporations" and would therefore not be subject to the minimum franchise tax as defined in CA Rev & Tax Code § 23153. As long as the Wyoming Statutory Trust is taxed as a disregarded entity, it has not triggered the minimum franchise tax for hundreds of our clients who have utilized them successfully. Here is a link to one of the Chief Counsel Rulings
https://www.ftb.ca.gov/tax-pros/law/chief-counsel-rulings/20...Chris, I appreciate you entering the discussion, and it would be helpful for us if you explicitly mentioned that you work for Anderson as their legal counsel.
I have three questions about the link you provided, and I am NOT an attorney, so these are layman's questions.1. As all private rulings, it contains a disclaimer that we probably should not ignore:
"Please be advised that the tax consequences expressed in this Chief Counsel Ruling are
applicable only to the named taxpayer and are based upon and limited to the facts you have
submitted."In other words, this is not a legal precedent, as far as I understand, and the FTB is not bound by it - am I mistaken?
2. The ruling refers to a Massachusetts Business Trust, not a Wyoming Statutory Trust. Does it matter?
3. Most importantly, it addresses a corporation defined under CA RTC Section 23153. However, what we are discussing here is an LLC, and it is controlled by a different CA RTC section, Section 17941. And while 17941 does refer to 23153 in respect to the amount of the fee, it does not appear to defer to 23153 as far as the imposition of this tax.
In other words, per my non-attorney reading of your linked document, it does not shield LLCs from the $800 extortion.
Please clarify what am I missing here. Thank you.
- Attorney · UT · Member since 2025 · 10 posts · 16 votes1y
Quote from @Michael Plaks:
Quote from @Chris Wade:
In 2016, there were two Chief Counsel Rulings by the Franchise Tax Board where they declared, at least in some instances, that business trusts like a Wyoming Statutory Trust, are not considered "corporations" and would therefore not be subject to the minimum franchise tax as defined in CA Rev & Tax Code § 23153. As long as the Wyoming Statutory Trust is taxed as a disregarded entity, it has not triggered the minimum franchise tax for hundreds of our clients who have utilized them successfully. Here is a link to one of the Chief Counsel Rulings
https://www.ftb.ca.gov/tax-pros/law/chief-counsel-rulings/20...Chris, I appreciate you entering the discussion, and it would be helpful for us if you explicitly mentioned that you work for Anderson as their legal counsel.
I have three questions about the link you provided, and I am NOT an attorney, so these are layman's questions.1. As all private rulings, it contains a disclaimer that we probably should not ignore:
"Please be advised that the tax consequences expressed in this Chief Counsel Ruling are
applicable only to the named taxpayer and are based upon and limited to the facts you have
submitted."In other words, this is not a legal precedent, as far as I understand, and the FTB is not bound by it - am I mistaken?
2. The ruling refers to a Massachusetts Business Trust, not a Wyoming Statutory Trust. Does it matter?
3. Most importantly, it addresses a corporation defined under CA RTC Section 23153. However, what we are discussing here is an LLC, and it is controlled by a different CA RTC section, Section 17941. And while 17941 does refer to 23153 in respect to the amount of the fee, it does not appear to defer to 23153 as far as the imposition of this tax.
In other words, per my non-attorney reading of your linked document, it does not shield LLCs from the $800 extortion.
Please clarify what am I missing here. Thank you.
Hi Michael! I'm happy to clarify. First I do want to clear the air that while I am a senior attorney at Anderson, I am not Anderson's legal counsel. And you're not wrong- this is in fact just a ruling, somewhat similar to an IRS private letter ruling, that is not necessarily binding law. A key difference between a Chief Counsel Ruling (CCR) and a private letter ruling (PLR) though is that CCRs are authoritative interpretations of CA tax law and can be cited by taxpayers as persuasive authority- PLRs cannot usually be successfully argued as precedent as they are truly intended to be specific in nature and scope. However, we have had much interaction with the FTB over the last several decades and our strategy using the WST has not been shot down by them.
To your point, this could change any day, but they are well aware of what our clients have been doing and have not given us or our clients push back. As such, we've used the ruling to successfully utilize the WST under the interpretation that these rulings apply to business trusts and not just Massachusetts Business Trusts. As for your third point, I think we can agree that California's long arm here is a bit too long- especially considering CA RTC Section 17941(d) where it states essentially any entity is subject to the tax as long as the LLC was "formed by one or more persons under the law of this state, any other country, or any other state." Now hopefully you don't work for the FTB and plan to use this against me, but I don't interpret a WST to necessarily be a "person" according to 17941(d) so when the WST forms and owns these out of state LLCs...the end result is what our hundreds, if not thousands, of CA clients have experienced for several years now.
Please note that we do not feel the WST is appropriate in all circumstances, and honestly a lot of the time we still recommend our clients to consider the $800 franchise tax a cost of doing business in CA, as it is fairly easy to raise rent by $70 per month to offset that cost.
Hopefully this clarifies a bit!
- Specialist · San Clemente, CA · Member since 2014 · 50 posts · 75 votes1y
I have had rental property in California for 26 years and have met with two separate attorneys on this issue. Both of them essentially said:
1. Umbrella policy is cheaper than multiple LLCs and in some ways provides better liability protection. Mine costs less than 1k a year for a million in coverage above and beyond my property insurance liability coverage and I don't need to pay an accountant to do separate LLC returns.
2. LLC veils can be relatively easily pierced and if they are pierced they you wish you had opted for #1 above instead of the LLC.
3. Unless you own properties worth many millions, the Umbrella is usually the best option. The attorneys I met with indicated that it may be worth considering LLCs for high net worth individuals. At the time I met with them, I had 6 properties valued at a total of about 4 million and In their mind this was far too low to consider LLCs.
- 1yGeorge SkidisPro MemberRental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes
As an income tax preparer, not declaring your income in another state is a dangerous option. The other issue is you cannot declare your losses when it suites you. If you receive income from an LLC in another state that income is taxable to you in your state of residence. On the other hand, an LLC in another state that does not do business in your state may be exempt. Your income is not.
An LLC can choose to be taxed as a sole proprietor (Disregarded entity on Schedule E), Partnership, S Corp or C-Corp.
Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity.
Once an LLC decides to be taxed as something other than a disregarded sole proprietorship it must file the proper tax return the very next tax year. Even if no income was earned. The penalty for late filing penalty is $220 per month per partner. Example: 6 months late with 4 partners = 220 x 4 x 6 = $5,280 and it goes up $880 per month until filed. This is true even if the LLC did not earn any money in those months.A qualified income tax preparer like myself can get up to 12 months of penalties waived, One Time. They just have to swear to the IRS that you are an uniformed tax filer (idiot) that didn't know what the consequences were. First time I did this I got 12 out of 18 months waived. After spending $24,000 to attend the event they bought the $6,000 Wyoming LLC package at a Bigger Pockets seminar and left it on a shelf for almost 2 years. It took them that long to pay off their credit cards and even think about investing. That is why I think of them as Busted Pockets.
An LLC taxed as a partnership or S-Corporation issues a Form K-1 to each partner. The K-1 declares their profit or loss and percentage of ownership. Once California sees the K-1 on your personal tax return you will owe the LLC Fee.
The only tax entity that does not issue a K-1 is the C Corporation. Once you get paid and declare the income on your personal return, California will most likely check out the LLC in the state and go after you.
Avoid tax fraud. Move out of California if you don't like being taxed to death. Illinois isn't much better. Additionally, our legislature just gutted a huge percentage of LLC protections.
An LLC provides some asset protection. However, if you don't maintain all of the "Corporate Proprieties" it can be pierced by even the worst attorneys.
Always carry the MAXIMUM liability protection on each property and purchase both a personal and a commercial liability policy of $2 million or more. When buying umbrella policies don't forget to ask the agent what the "Retained Amount" is.
Check out my REIA below
- 1yJason MalabuteBusiness MemberAccountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 914 votes
That's not true — it's a common misconception. California doesn't care where your LLC is registered. If you live in California or if your LLC is doing business in California (including earning income sourced to CA), you’re generally subject to the $800 annual franchise tax.
Even if the property is held in a Wyoming Statutory Trust or an out-of-state LLC, if you're a California resident or derive income from California, the Franchise Tax Board (FTB) will still come after you. As they say — the price of nice weather is $800!
Malabute & Company CPAs527 Reviews - 1yMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Listen, folks. We can forever argue about California weather and California politics, with no chance of agreeing.
However there is one thing about California which is not debatable and legitimately makes it the most despised state. It hosts the darn Golden State Warriors. That does it.
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