The California Franchise Tax Board (FTB) issued its statutory inflation-based indexed values relating to the 2024 taxable year. The inflation rate was 3.3%, as measured by the California Consumer Price Index (CCPI) for all urban consumers from June of 2023 to June of 2024. For more information, click here.
California considers an entity to be doing business in the state if any of these apply:
- The entity is engaged in any transaction for the purpose of financial gain within California;
- The entity is organized or commercially domiciled in California; or
- The entity’s California sales, property, or payroll exceed:
- Sales of the taxpayer in California exceed the lesser of $735,019 or 25% of the taxpayer’s total sales;
- The property of the taxpayer in the state exceeds the lesser of $73,502 or 25% of the taxpayer’s total property; or
- The amount paid by the taxpayer in the state for compensation exceeds the lesser of $73,502 or 25% of the taxpayer’s total compensation.
Public Law 86-272 potentially applies to companies located outside of California whose only in-state activity is the solicitation of sale of tangible personal property to California customers. Businesses that qualify for the protections of Public Law 86-272 are exempt from state net income taxes. These entities, however, still may be considered to be doing business in California and may be liable for filing and paying the applicable amounts.
Please contact the Ryan tax professionals below to determine how these changes impact your business.
TECHNICAL INFORMATION CONTACTS:
Gina Rodriquez
Principal
Ryan
916.414.0400
gina.rodriquez@ryan.com
Josh Booth
Principal
Ryan
916.790.3772
josh.booth@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.