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California Tax Law Questions & Answers
1 Answer | Asked in Estate Planning, Tax Law and Social Security for California on
Q: I would like to shelter my lump-sum SSDI payment from further taxation. I am currently in an "uncollectible" status.

A lawyer friend suggested an irrevocable trust. Does that make sense?

Thank you,

Nina Whitehurst
Nina Whitehurst answered on Jul 17, 2021

It is not clear what “further taxation” concerns you. Is it income tax? Estate tax? Real property taxes? Something else? It could be that you yourself do not understand the taxation of SSDI benefits. You should consult with a tax advisor about that. Most likely you will not need any kind of... Read more »

1 Answer | Asked in Real Estate Law and Tax Law for California on
Q: Does a tenant paying property taxes and utilities count as taxable income to the owner?

My parents live in a house I own. I don't want to charge them rent, but do want to set up a rental agreement where they will agree to pay the property taxes and utilities. Do I need to count the property taxes and utilities paid by them as rental income on my taxes?

David S. Greenberg
David S. Greenberg answered on Jul 11, 2021

The Internal Revenue Code clearly calls for such payments to be characterized as rental income.

1 Answer | Asked in Immigration Law, Real Estate Law, Tax Law and Estate Planning for California on
Q: If I’m a US citizen does that mean I’m also US resident even if I have residency abroad?

My Grandparents have made a condition on their Trust that no funds should go to issues of my Mom who are not permanent residents of the United States. I have been living in Germany under temporary residency permits and now I’m in California considering moving back to US now in order to protect... Read more »

Agnes Jury
Agnes Jury answered on Jul 9, 2021

The term "permanent resident" of the U.S. in immigration law context refers to someone who is NOT a U.S. citizen but has obtained the right to permanently reside in the U.S. (a.k.a. Green card) and is physically present in the U.S. typically at least 6 months out of any year (so not to... Read more »

1 Answer | Asked in Employment Law and Tax Law for California on
Q: Employee withholding wrong on first paycheck. How to correct before second one.

I took a job with the understanding that I could let them know before the first paycheck whether to submit the W2 form I filled out or whether to change it to a 1099-nec. Payroll wasn’t informed and issued first check as a W2 and I wanted it as 1099. How can we fix this before second payroll?

Neil Pedersen
Neil Pedersen answered on May 27, 2021

You don't get to decide if you are paid on a W-2 or 1099 basis. If you are an employee, you must be paid on a W-2 basis. Reporting income on a 1099 basis means you are being treated as an independent contractor, and that is a legal conclusion based on many factors. In California it is very... Read more »

3 Answers | Asked in Business Formation, Business Law and Tax Law for California on
Q: Do I have to pay the CA franchise and file annual income tax for a newly formed single member LLC with no income?

Hello

I created a new LLC last July and I'm the only member.

So far the LLC has not been operative and has generated no revenue.

Do I need to file an income Tax return or pay the $800 California Franchisee tax?

Thank you.

Julie King
Julie King answered on May 17, 2021

Unfortunately , yes, you have to pay that franchise tax regardless of whether your LLC is active or inactive. So long as the LLC is in existence, you must pay the annual tax. Some people make the mistake of only paying the tax when they earn an income, which causes the LLC to go into "FTB... Read more »

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1 Answer | Asked in Tax Law for California on
Q: Are capital gains part of gross income under California tax law?
David S. Greenberg
David S. Greenberg answered on May 7, 2021

California taxes capital gains as regular income.

1 Answer | Asked in Business Law, Employment Law and Tax Law for California on
Q: CA franchise tax required just because I have an employee there?

We are a MA-based S corporation. If we have an employee who works remotely in CA, must we pay the franchise tax (minimum $800)?

RTC DIVISION 2 - PART 11 - CHAPTER 2 - ARTICLE 2 - Section 23153 says that this only applies to (1) corporations incorporated in CA (we're not), or (2)... Read more »

Kenneth Sisco
Kenneth Sisco answered on Apr 30, 2021

Employees have nothing to do with the California Minimum Tax. If you are an entity, LLC, Corp., LP, etc., that has applied for, and obtained qualification to do business in California, you are required to pay the Minimum tax of $800 per year, whether you have any employees or not, in California or... Read more »

1 Answer | Asked in Business Law, Contracts, Land Use & Zoning, Real Estate Law and Tax Law for California on
Q: My friend is interested in donating a piece of land to my nonprofit organization. How would we go about this?

Would he receive any benefits from this, tax write offs etc? Also he owes taxes on the property, I am willing to pay those off to make this happen. I plan to use this as a nonprofit headquarters, Art/Yoga/Event Space. Its already zoned for 4 residential structures

Robert Philip Cogan
Robert Philip Cogan answered on Apr 20, 2021

Real estate transfers and planning for the tax consequences are never do-it-yourself tasks. Tax benefits cannot be calculated without information about the property and the taxpayer. You say that you want a nonprofit HQ in a space zoned for residences. This by itself should be a red flag. If you do... Read more »

2 Answers | Asked in Estate Planning and Tax Law for California on
Q: What can be done if "B" trust assets were donated benefiting "A" trust executor and second wife?

Father-in-law is Bill. His 1st wife is Mary. They had a trust that owned 20 rental homes. Beneficiaries were 3 kids. About a year after Mary died, Bill remarried. Ten yrs later, Bill and second wife Joyce created a trust. At that time, 10 rentals were put in a "B" trust (Mary's... Read more »

Jonathan Purcell
Jonathan Purcell answered on Apr 12, 2021

The 'B' subtrust of the Mary and Bill trust, holds ten properties.

Joyce presumably has a right to periodic income from rents.

Could a loan be arranged using equity based on one or more properties to secure a loan, which would be repaid on the death of Joyce?

This...
Read more »

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1 Answer | Asked in Tax Law and Civil Rights for California on
Q: What is the process to be removed from some one taxes.

Without my permission I was used as a dependent there for I didn't get the enconmic payment and when I file online it gets rejected or something goes wrong

Linda Simmons Campbell
Linda Simmons Campbell answered on Apr 12, 2021

You will need to file a paper return and include a note indicating that you should not have been taken as some one else's dependant.

1 Answer | Asked in Business Formation, Business Law and Tax Law for California on
Q: I have a vending machine business, can I have freelancers?

I know there some ab 5 law now but I want to hire freelancers to stock my machines. I will purchase the food products for the machines. They will stock the machines once or twice a week. Meaning 1- 2 hours a week. I am giving them a set payment amount for each month they help me. Do I have to... Read more »

Julie King
Julie King answered on Mar 21, 2021

The chances are very high that those workers would be classified as employees. In today’s world, it is harder than ever to successfully classify a worker as an independent contractor. But a lawyer would need to ask a lot of questions before giving an opinion. For example, will the workers have... Read more »

1 Answer | Asked in Tax Law for California on
Q: Me and my wife is not divorced or legally separated she is kept all the stimulus checks is there anything I do

as married and I'm always ahead of household she always thinks you can just do whatever she wants and get away with it all I want is what is mine my portion not the kids and not hers what can I do to get my portion

Maurice Mandel II
Maurice Mandel II answered on Mar 19, 2021

Take her to Small Claims court.

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1 Answer | Asked in Tax Law and Real Estate Law for California on
Q: Can anyone pay the taxes on a property that has not been lived in for several years and gain rights to the property?

If a property tax becomes delinquent on a property which I do not own and which is uninhabited, and I pay that tax, do I then have a right to entry on to that property?

Maurice Mandel II
Maurice Mandel II answered on Mar 19, 2021

Not unless you buy the property at a tax lien sale. You should contact a local RE attorney.

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1 Answer | Asked in Tax Law for California on
Q: Started a new religion; got an EIN. Should I apply for tax exemption in the (no members) beginning or wait?

I'm thinking I should apply for the 501(c) (3) status in the very beginning with no members or place to "worship" because in the beginning the IRS won't see me as anything that could be taking monies they could otherwise be taxing.

For example, if I'm just... Read more »

Maurice Mandel II
Maurice Mandel II answered on Mar 19, 2021

The earlier the better. Then you have time to work out any snags.

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1 Answer | Asked in Criminal Law and Tax Law for California on
Q: My ex spouse used my social security number on her 1099s. What can I do?

My ex spouse receives payments from a company that pays both of us. I just learned that she used my social security number for her payments. We are currently in court for another matter. Through discovery I was able to see years of her 1099s. All of hers have my social security number instead of... Read more »

Dale S. Gribow
Dale S. Gribow answered on Mar 18, 2021

if you are in court you must have a lawyer.

direct that question to him/her.

if you have kids, you probably want to consider carefully whether you want any potential criminal action against her.

1 Answer | Asked in Tax Law and Probate for California on
Q: I am 75, my estranged daughter is 35. I have read that an UGMA can be ended if I pay IRS 10%

and then pay the taxes at my own rate. Can anyone suggest what legal book or IRS ruling I can consult? I plan to hire an attorney, but so many of you seem to think this can't be done.

Barry L. Adams
Barry L. Adams answered on Mar 9, 2021

When you set up the UGMA account, you made a completed gift to the minor recipient. You cannot now revoke that gift. Therefore, it is not a tax issue - it is a legal issue.

1 Answer | Asked in Employment Law and Tax Law for California on
Q: Can retroactively reclassifying IC to employees, ammend returns, pay EDD/IRS penalties counter a misclassification suit?

If a small business that is being sued for misclassifying employees as independent contractors, and the they choose to ammend payroll taxes, tax returns and retroactively reclassify these individuals, will it help in their position for the lawsuit? The plaintiffs were deceptive from the start and... Read more »

Neil Pedersen
Neil Pedersen answered on Feb 24, 2021

It is wise that you think proactively, but you should not do anything until you have retained your defense attorney who can then guide you through the best way to deal with the alleged liability. And you should not try to defend this case yourself. These kinds of cases can be bet-your-company... Read more »

1 Answer | Asked in Business Formation, Business Law, Tax Law and Trademark for California on
Q: i have my own business and i went as far as paying for my trademark do i have to pay taxes on my business still?

i have not have my wedsited just yet or business cards, i havent even hired no one and i just want to know if i have to files for the business and even if i got my ein number

Julie King
Julie King answered on Feb 21, 2021

If you are taking about income taxes, the answer will depend on whether you have any income. However, you must remember that there are MANY kinds of taxes. If your business is incorporated or a limited liability company, you must pay the minimum of $800 per year franchise tax. I assume you have a... Read more »

1 Answer | Asked in Estate Planning and Tax Law for California on
Q: Can I gift shares to my daughter for estate planning?

I just started a company (a Delaware C-corp). It is worth basically nothing at this point since it just got started. There are no investors so far, so I own most of the shares in the form of restricted stock that has been early-exercised. The shares will be vested over 4 years.

I have a... Read more »

Jeffrey Louis Gaffney
Jeffrey Louis Gaffney answered on Feb 9, 2021

One solution I have seen is to issue her non-voting shares. These will have 40% less value than a regular voting share because they have no control. That would allow you to give them to her at $25,000 per year without filing a gift tax return.

3 Answers | Asked in Tax Law and Probate for California on
Q: Is the property sale of a deceased child considered an inheritance and if so does it exempt them from some or all taxes?

A family friends son passed away. They are in probate to sell his home and pay off his debts, they are the only heirs. They live in CA as is the home being sold.

John B. Palley
John B. Palley answered on Feb 6, 2021

Hard to say for sure but typically most probate assets are received tax free. The exception are things like 401ks and retirement accounts. Happy to chat about the details if you contact me directly.

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