Skip to Main Content

LEGAL RULING NO. 011

CALIFORNIA FRANCHISE TAX BOARD
Legal Ruling No. 011

June 26, 1958


DOING BUSINESS: ACTIVITIES AFTER WITHDRAWAL


As a matter of factual determination the activities of the subject corporation after withdrawal from this State did not constitute doing business.

Taxpayer, a Nevada corporation qualified to do business in California, withdrew in January, 1949, however, it was not dissolved. In 1947 and 1948 the operating assets had been sold and the only assets remaining as of January 1, 1949 were bank deposits and Federal tax refunds receivable. After withdrawal taxpayer maintained an office in Los Angeles with X Corporation. There were no activities nor office in Nevada. Taxpayer had no income subsequent to January 1, 1949, although salaries and certain other expenditures were made during the year. Advice is requested as to whether taxpayer was "doing business" after its withdrawal.

"Doing business" is defined as actively engaged in any transaction for financial or pecuniary gain or profit. A corporation remaining in existence solely for the purpose of collecting its accounts receivable, discharging its accounts payable, and pursuing a claim for refund of Federal taxes has been held not to be doing business within the meaning of the law. Such transactions were not aimed at the production of income. (Appeal of Johnson Foundry & Machine Co., State Board of Equalization, November 17, 1949). The instant case presents a similar situation. The records show that taxpayer had no receipts and no income in 1949. There is no evidence shown of any transaction entered into for profit, it appearing that the office staff was maintained merely to prosecute Federal tax claims and accomplish winding up of the affairs of the corporation, all operating assets having been disposed of. Although a corporation may withdraw and yet continue activities which constitute "doing business", the activities of taxpayer were not of such a nature and taxpayer was not doing business after its withdrawal.

Help Us Improve Our Website

Don't include social security numbers or other personal/confidential information.



Thank you for your help.

If you need assistance, contact us.

Oops! Something went wrong.

We appreciate your feedback. Please try again later

Chat with an FTB Representative
 

You are leaving ftb.ca.gov

We do not control the destination site and cannot accept any responsibility for its contents, links, or offers. Review the site's security and confidentiality statements before using the site.

If you have any issues or technical problems, contact that site for assistance.

Ahora está saliendo de ftb.ca.gov

Nosotros no controlamos el sitio web al que se destina y no podemos aceptar ninguna responsabilidad por su contenido, enlaces, u ofertas. Revise las declaraciones de seguridad y confidencialidad del sitio antes de usar el sitio. Si tiene algún problema en general o técnico, comuníquese con ese sitio para obtener asistencia.

Si tiene algún problema en general o técnico, comuníquese con ese sitio para obtener asistencia.