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California Tax Law Questions & Answers
1 Answer | Asked in Business Law and Tax Law for California on
Q: Is the owner of a start-up business in California allowed or required to be paid wages as though they are an employee?
Julie King
Julie King
answered on Feb 3, 2022

Yes, you are allowed to pay yourself a salary. Work with your accountant to be sure you are getting the best tax advantages.

1 Answer | Asked in Estate Planning, Real Estate Law and Tax Law for California on
Q: Is there a way to claim a house from a trust and then transfer the deed of a house without it showing up on taxes?

A family member of mine was bequeathed a house from a living trust. He has not claimed it because he doesn’t work so he can get medi-cal to cover the medical care that he needs. Would he be able to claim it and transfer it to someone else without it affecting his qualifications for medical or his... Read more »

Julie King
Julie King
answered on Jan 19, 2022

No. Deeds are public records that anyone can see and receive a copy of simply by asking the County Recorder and paying the copying fee. Many counties have their deeds online for easy access. Also, be aware that there is a “look back period” before someone can qualify for some needs-based... Read more »

1 Answer | Asked in Tax Law for California on
Q: In 2011 I incurred a state California tax debt. In six years ago I got married. If I move to Washington state.

Will California still go after my wife’s income or just mine to pay back the debt

David S. Greenberg
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David S. Greenberg
answered on Jan 7, 2022

Because Washington is a community property state, you have a community interest in your wife's earnings. The California FTB can therefore collect on your community interest in those earnings.

2 Answers | Asked in Divorce, Family Law, Personal Injury and Tax Law for California on
Q: Im paying all the bills and husband hiding his money in an investment in x name. What can I do. I found bank letter

The letter was sent to my home re: Request to change address to x address. We have been married for a year.

Dale S. Gribow
Dale S. Gribow
answered on Jan 7, 2022

YOU PROBABLY WANT TO ASK THIS QUESTION TO A FAMILY LAW ATTORNEY IN YOUR AREA.

CALL FOR A FREE CONSULTATION ASAP.

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2 Answers | Asked in Employment Law and Tax Law for California on
Q: final paycheck stopped by bank to ask for verification. Now my bank put 2 week hold on the payroll check. what do i do
Brad S Kane
Brad S Kane
answered on Dec 23, 2021

You can ask for your employer to issue a stop payment and provide you with a cashier's check.

The fact the bank put a hold on the final check is a bad sign.

Depending on whether the check is ultimately rejected, you may be entitled to waiting time penalties for each day late up...
Read more »

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1 Answer | Asked in Estate Planning and Tax Law for California on
Q: Irrevocable trust has three sibling equal beneficiaries - one sibling is trustee. Are IRS rules for grantor trust met?

The original settler is deceased. The trustee has power to distribute his 1/3 of income and principal to himself. The question is whether the Trustee-beneficiary is considered a substantial owner under IRC 678(a)(1) and therefore taxed currently on his 1/3 of trust income.

Julie King
Julie King
answered on Dec 23, 2021

It is most likely a non-grantor trust, but there is no way to know unless a lawyer reads the terms of your particular trust. Each trust contains different language. The main question will be whether the settlor/grantor of the trust has any control or powers. Take your trust to an attorney in your... Read more »

1 Answer | Asked in Criminal Law, Divorce, Family Law and Tax Law for California on
Q: My Ex exercised half the shares of community assets before splitting our stocks and did not communicate causing loss

My Ex is supposed to give 50 % of his pre-ipo stocks over to me and keep me informed what he is doing with them. But he kept me in dark exercised 50% of them and never gave me an option to exercise as it was community property in his name and now claims all exercised shares are his. Now if i agree... Read more »

Dale S. Gribow
Dale S. Gribow
answered on Dec 10, 2021

more info needed.

it sounds like a family law matter and I do not accept divorce matters.

present this to your divorce attorney and if you don't have one request a courtesy consultation with one

1 Answer | Asked in Tax Law for California on
Q: I am a partner with a company. They report annual distribution through K1 in my name. Can that become income to my S cor

If I start a S corp or that K1 should be issued in my S corp name, specifically?

D. Steven Yahnian
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D. Steven Yahnian
answered on Dec 5, 2021

If your S Corporation becomes a partner in the partnership, then your S Corporation will report the income from the partnership as evidenced by K-1 issued to it by the Partnership. Then, you will report the income on your K-1 from the S Corporation because the partnership income passes through to... Read more »

1 Answer | Asked in Tax Law and Real Estate Law for California on
Q: Will I receive a $250,000 tax exclusion under Prop 13 from selling inherited ownership (less than 100%) in property?

My parents bought the home in 1995 and owned it 50/50. About 6 years ago they divorced and my mother moved out and my father stayed living in the home with my brother and me. My father recently passed in June of 2021 and left his 50% ownership to my brother and me in his trust. My mother is gifting... Read more »

D. Steven Yahnian
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D. Steven Yahnian
answered on Dec 4, 2021

You shared a lot of facts and posed what ultimately appears to be a income tax question concerning the tax effect of your sale of your 1/2 interest in the house. You are not asking about the effect of Proposition 19 on the property taxes you would pay.

Here are the income tax rules that...
Read more »

1 Answer | Asked in Business Law, Mergers & Acquisitions and Tax Law for California on
Q: I owe the CDTFA a tax balance generated by my business corporation that I no longer own. do I have liability protection?

The company was sold but only the assets were acquired. Does the tax debt fall on me personally?

David S. Greenberg
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David S. Greenberg
answered on Nov 18, 2021

Section 6829 of the Revenue and Taxation Code provides that the California Department of Tax and Fee Administration (CDTFA) may pursue collection action against certain corporate personnel for any unpaid corporate sales and use tax liability.

1 Answer | Asked in Tax Law and Employment Discrimination for California on
Q: my boss gave me a 2-week suspension, during which, i saw my job on craigslist, and wasn't allowed back to work.

I worked for my (ex)boyfriends family business for over a year and about 2 months after we broke up i started seeing a coworker when my ex found out he punched the coworker and the boss "his dad" said we all 3 had to have a 2-week suspension to cool off. However, during the 2 weeks, I... Read more »

Neil Pedersen
Neil Pedersen
answered on Oct 21, 2021

In California you are considered to be an at will employee unless you have an agreement to the contrary with your employer about that status. That means you can be terminated at any time and for any reason or even no reason at all. If the employer views you as being a disruption - whether that is... Read more »

1 Answer | Asked in Tax Law for California on
Q: Would I have to pay income/wealth taxes to California if I am living in Washington and working remotely for a Cali biz?

Hello,

My wife and I live in Washington state. We both work remotely for Washington companies. As such there are no state income taxes for us to pay.

She has received a job offer from a California based company. Though she would be working remotely from Washington, the company wants... Read more »

Maurice Mandel II
Maurice Mandel II
answered on Sep 21, 2021

If she is working remotely and designated as employed through the California office, she could be subject to California income tax. You should really take your situation to a Tax Attorney in WA, and discuss it for a specific opinion. Sometimes people working outside California's boundaries... Read more »

1 Answer | Asked in Tax Law for California on
Q: SS# for K1 for trust distribution.

I need to provide my SS for K1 for trust distribution. I have changed my first name but trust is in old name. Do I need to give my new name to trustee?

Maurice Mandel II
Maurice Mandel II
answered on Sep 13, 2021

You need to discuss this with the Trustee if you have a legal change of name. The K1 has to match your legal name that goes with your SSN.

1 Answer | Asked in Tax Law, Business Formation and Business Law for California on
Q: Hello, I am planning to found my own consulting firm. Should it be a LLC or sole proprietor?

Hello, I am planning to found my own consulting firm. I am helping startups in the US and EU with public policy, grant strategy, fundraising and business partnerships. Should it be a LLC or sole proprietor? Which one will be better for tax-wise?

Shawn R. Jackson Esq.
Shawn R. Jackson Esq.
answered on Aug 6, 2021

The answer depends upon three initial focus points: [1] your exposure to liability ... [2] your desired management structure and [3] how you would like to see ownership and succession. The next step for you would be to schedule at least two free initial calls with attorneys of your choice ... by... Read more »

1 Answer | Asked in Consumer Law, Tax Law and Child Support for California on
Q: I paid 2,100 for my son's field trip to washington dc before corna, but they only gave a refund for 1,800 (late corna).

I paid 2,100 for my son's washington dc trip which was before corona started, but they only gave me a refund of 1,800 which was 300 less than what i even paid and said its for the processing fee??? Can i sue them?

Scott Richard Kaufman
Scott Richard Kaufman
answered on Jul 25, 2021

Sure, why not?

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
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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
PREMIUM
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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