California source income in S Corp and C Corp

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removeps-groups

Suppose there is an S corp in California, and the corp has a
shareholder in TX. Does the TX shareholder have to file a CA-540NR
tax return to report their profits from the S Corp's K1?

What if the corp is a C corp? Does the shareholder have to pay CA tax
on the distributions reported on the 1099-DIV?

I'm guessing the answers are yes and no, but it doesn't quite make
sense why S corp income is CA source.

We had a recent post about a CA LLC that has rental income, but I know
that rental income from houses in CA is CA source income.
 
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P

paulthomascpa

Suppose there is an S corp in California, and the corp has a
shareholder in TX. Does the TX shareholder have to file a CA-540NR
tax return to report their profits from the S Corp's K1?

"S" profits, yes.




What if the corp is a C corp? Does the shareholder have to pay CA tax
on the distributions reported on the 1099-DIV?



Dividends, no.



I'm guessing the answers are yes and no, but it doesn't quite make
sense why S corp income is CA source.

We had a recent post about a CA LLC that has rental income, but I know
that rental income from houses in CA is CA source income.


The business activity is what sources the income. Profits on that activity
are passed through, so is the nexus to file and pay CA tax.

Dividends are not activity. I have no clue where GE makes it's money, and
it's already been taxed to GE by that jurisdiction.
 

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