Discussion:Principal place of business CA filing
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Discussion Forum Index --> Basic Tax Questions --> Principal place of business CA filing
Discussion Forum Index --> Tax Questions --> Principal place of business CA filing
| 1 April 2008 | |
| TP operates hedge fund. LLC based in CA which is the general partner of LP based in Delaware. LP holds securities. Am I correct in saying the LP does not file in CA only in Delaware. | |
| 1 April 2008 | |
| No, if the LLC is organized or registered in CA, or doing business in CA, it must file Form 568 (assuming multiple members) or whatever return its single member is required to file. | |
| 2 April 2008 | |
| Katie, yes that is so stated the question is about the Delaware LP. | |
| 2 April 2008 | |
| Oops, I must have been speed-reading again <G>.
A partnership is considered to be doing business in CA (and therefore required to file Form 565) if a partner, general or limited, is conducting business in CA on behalf of the partnership. Since the GP is in CA, it seems likely that it is engaging in business activities in CA oh behalf of the partnership. CA law defines "doing business" very broadly as engaging in any transaction or activity for the purpose of pecuniary gain or profit. Writing a check to pay a bill in CA has been held to be doing business. So, depending on what activities the GP performs in CA for the partnership, the LP may be required to file a CA return. See the Form 565 instructions and CRTC Sec. 23101. | |
| 2 April 2008 | |
| Katie, you are very kind, thank you very much. This is a hedge fund, the LLC providing the investment management services for the LP. LP simply a pool of investors. | |
| 2 April 2008 | |
| Oh, then I think there is no question that the LP has to file a CA return. All the activity is actually going on in CA.
That doesn't necessarily mean that the nonresident limited partners have CA source income arising from this LP. Check out Cal. Rev. & Tax. Code Sec. 17955. I'm not sufficiently familiar with hedge fund operations to know for sure whether this "safe harbor" applies to them, but it seems likely. | |
