I'm desperately in need of help, I've been trying for hours but can't get the right answer for my Federal Income Tax class. It's about how multistate business will be taxed in 2013 with the passage of Prop 39 in CA
Here's the problem I'm working on now:
Ben Logan is the 100% owner of Logan Earth Sandals LLC, a single member LLC which has elected to be treated as a disregarded entity. Manufacturing plant is in Nevada where Ben lives, he likes Nevada because there's no state income taxes. The company sells most of it's sandals in California. Ben is single and has no kids.
Taxable Income: $8,000,000
Nevada
gross sales: $5,000,000
payroll: $325,000
Avg Assets: $10,000,000
California
Gross sales: $35,000,000
Payroll:$25,000
Avg Assets: 0
(According to the throwback rule, 100% of it's sales are sourced to California because there's no state income taxes in Nevada)
So the questions we have to answer are:
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Will these laws effect his 2012 tax liability? If yes, by how much?
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Assuming the company has the exact same financial data for 2013, will these laws effect his 2013 tax liability and if yes, by how much?
I've already answered #1 and verified with my teacher that it's correct. however, I can't seem to get #2, about his tax liability in 2013 and how it changes. My professor told me to read proposition 39 that passed in CA. I'm supposed to read the actual propositions that passed but I'm having a hard time doing so. It's hard to find the actual text of the proposition and I'm kind of clueless and need some direction. I've been spending hours on this and beating myself up over this, I'm desperate for some help
The above is what I found on a database provided by my school. I've been looking but can't find the actual fucking text of the prop and it's driving me crazy.
The best I could find. This seems to be the best source. Section 4 talks about how tax is calculated which is what I did in question #1. I can't find how this is going to be different for 2013.
Posted Dec 2, 2012, 7:20 PM UTC · edited