Here is how the conversation usually goes at Berdon:
Berdon Person Other Than Me (“BPOTM”): Wayne, I have a client whose only connection to California is a 0.001% non-managing membership interest in manager-managed LLC. The LLC is doing business in California. Do I have to pay the $800 minimum franchise tax?
Me: Well, there is a case with a limited partnership and similar facts that says you don’t have to. But the Franchise Tax Board (“FTB”) has been interpreting it very narrowly and only applies the case to LPs and not LLCs.
BPOTM: Wayne, that’s crazy. The facts and circumstances are exactly the same. Why should my client have to pay $800 and why should we go to the expense of filing the return?