CA Tax Question
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CA Tax Question Our club is charted as a limited partnership. I filed the documents for the 2008 for CA and the Feds in March. I just got a notice from CA demanding that we pay $800 for an amount equal to the minimum franchise tax. As I am a new treasurer, I have never seen this. Each members pays her own taxes and for the Feds I seem to have done everything correctly. I used the forms generated by Bivio for CA, so what do I need to do to get CA off my back for the $800? The sad news is that you should never have registered as a limited
partnership, but you probably already know that. If you are a typical investment
club, I am sure that you are not operating as a limited partnership, because
limited partners have no say in the operation of the partnership. I assume that
all partners have a say in investment decisions.
This, obviously, is a serious matter, and I can't really advise you except
to suggest 1 of 2 alternatives. 1) Take your sad tale of woe down to the
secretary of state's office, and explain the horrible mistake that was made and
humbly ask how to get out of it. Maybe the first thing you should do is see if
you really are a limited partnership, or just signed some registration form,
mistakenly. Take your partnership agreement with you. 2) Hire an attorney. That
will probably cost at least the $800 and may not result in getting rid of the
burden for this year.
I have no problem with operating as an LLC, which is different from a
limited partnership and provides the limited liability aspects of a limited
partnership. Actually, I have no problem in operating as a general partnership.
IMO, the fears of liability for general partners of an investment club are
grossly overstated.
Rip West
Saint Paul, MN Our club is charted as a limited partnership. I filed the documents for the 2008 for CA and the Feds in March. I just got a notice from CA demanding that we pay $800 for an amount equal to the minimum franchise tax. As I am a new treasurer, I have never seen this. Each members pays her own taxes and for the Feds I seem to have done everything correctly. I used the forms generated by Bivio for CA, so what do I need to do to get CA off my back for the $800? You can't. CA, and many other states, charge an annual fee for the right to operate as a registered entity. A limited partnership is subject to the fee. A general partnership is not.
See General Information, Section F of the instructions.
Your only option is to dissolve the LP and re-establish yourself as a general partnership. (Oh, yeah, you already owe another $800 for 2009.)
Ira Smilovitz
In a message dated 04/04/09 21:23:05 Eastern Daylight Time, jhotovec@bivio.com writes:
In the specific case at hand, operating as an LLC would subject the club to the same $800 fee as operating as an LP. And it would require filing a different CA tax return, Form 568.
Ira Smilovitz
In a message dated 04/04/09 22:10:06 Eastern Daylight Time, ripwest@comcast.net writes:
As it turns out we are a general partnership; I had just seen the limited partnership from the request for money from CA Franchise Tax Board. I had filed it correctly as a general partnership & the tax board had made a mistake. So we don't owe anything. Thanks for the feedback from everyone. I would bet your note had a lot of us double-checking..... I know I did. What a sigh of relief when I saw: Domestic General Partnership !!! Details DO matter... Enjoyed the adrenalin rush.... Myrelle -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Judith Hotovec Sent: Monday, April 06, 2009 11:01 AM To: club_cafe@bivio.com Subject: club_cafe: Re: CA Tax Question As it turns out we are a general partnership; I had just seen the limited partnership from the request for money from CA Franchise Tax Board. I had filed it correctly as a general partnership & the tax board had made a mistake. So we don't owe anything. Thanks for the feedback from everyone. No virus found in this incoming message. Checked by AVG - www.avg.com Version: 8.0.238 / Virus Database: 270.11.42/2042 - Release Date: 04/06/09 06:22:00 |
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