The following revisions clarify apportionment of income for purposes of determining annual limited liability (LLC) fees due to the Franchise Tax Board (FTB) from multi-state LLCs.

Revenue and Taxation Code ยง25136
Amended by S.B. 858
Effective: For taxable years beginning January 1, 2011

For purposes of calculating the annual limited liability company (LLC) fee due to the Franchise Tax Board (FTB) from a multi-state LLC doing business in California, the calculation of gross income can be made:

  • by electing to be taxed under a single sales factor; or
  • by making no election, resulting in the LLC being taxed under property, payroll and double sales factors.

If a multistate LLC elects to be taxed under a single sales factor, the gross income upon which the annual fee is based is apportioned to California for:

  • services received in California;
  • the sale of intangible property used in California;
  • the sale of marketable securities if the buyer is in California;
  • the sale, lease, rental or licensing of real property located in California; and
  • the rental, lease or licensing of tangible personal property located in California.

If a multistate LLC does not make an election to be taxed under a single sales factor, the gross income upon which the annual fee is based is apportioned to California for:

  • income-producing activity performed in California; or
  • the greater proportion of income-producing activity is performed in California, based on performance costs.