Asset management limited liability companies are facing unique challenges under California’s new 'doing business’ standard

State and Local Tax
Over the past several years, the standard for ‘doing business’ in California has evolved due to statutory changes in the definition of ‘doing business’ and apportionment sourcing rules. California’s recent switch to a mandatory market-based rule for sourcing of services could result in an out-of-state asset manager that is organized as a limited liability company (LLC) to be subject to California’s LLC tax, LLC fee, and a California income tax withholding obligation, even though the company has no property or payroll in California, and all of its management services are performed outside of California.

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