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California FTB demand seems unreasonable

I am a CA resident.

I purchased a very small local existing business in FL. Everything is done in FL. No business whatsoever in CA or elsewhere. It pretty much runs by itself.

The local FL CPA entered my CA address in the Scorp Federal tax return for this business.

So the California FTB wants me to file a CA corp tax return and pay CA FTB taxes and furthermore pay penalties on the basis that I sign a few checks for the business.

In this scenario, does signing a few checks by a CA resident make it a CA corp and subject it to CA FTB taxes? None of the checks were payable to CA companies/vendors.

Can anyone please let me know where I stand on this issue?

Are there any black and white rules on this that I can attach to me reply to avoid these penalties?

PLEASE HELP!

Reply to
newbie
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Being a CA resident does not in itself create liability for corporate tax. The corporation would have to be doing business in CA. Based on your statement it would appear that the only item that might create a liability is the CA compensation rule. The corporation will be deemed to be doing business in CA if the S Corp's CA compensation exceeds the lesser of $52,956 (2014) or 25% of the total compensation paid by the S Corp.

See CA FTB Pub 1060 for information on doing business in CA.

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Reply to
Alan

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