California FTB issues guidance on application of Swart decision

Multistate Tax alert | March 6, 2017

On February 28, 2017, the California Franchise Tax Board (FTB) issued Notice 2017-01.


On January 12, 2017, the California Court of Appeal issued a published decision in Swart Enterprises, Inc. v. Franchise Tax Board, 7 Cal. App. 5th 497 (2017), holding that an out-of-state corporation was not “doing business” in California within the meaning of Cal. Rev. & Tax Code Section 23101 when the corporation’s only connection to California was its passive ownership of a 0.2 percent membership interest in a California-based manager-managed limited liability company. Learn more in our prior tax alert, which summarizes this decision.

On February 28, 2017, the California Franchise Tax Board (FTB) issued Notice 2017-01 which stated that the FTB will not appeal the Swart decision and provided guidance to taxpayers on the application of this decision to return filing obligations and/or claims for refund where the facts are the same as those present in the Swart case.

Access the FTB notice.


If you have questions regarding this Notice or California tax matters, please contact any of the following Deloitte Tax LLP professionals.

Christopher Campbell, principal, Deloitte Tax LLP, Los Angeles, CA, +1 213 553 3072

Valerie C. Dickerson, partner, Deloitte Tax LLP, Washington, DC, +1 202 220 2693

Steve West, managing director, Deloitte Tax LLP, Los Angeles, CA, +1 213 688 5339

Shirley J. Wei, senior manager, Deloitte Tax LLP, Los Angeles, CA, +1 213 553 1715

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