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California court holds nonmanagerial interest in LLC did not constitute doing business in state

A California Superior Court granted an out-of-state corporation’s motion for summary judgment and determined that the corporation’s ownership interest in a manager-managed limited liability company (LLC) did not constitute doing business in the state for purposes of the corporation franchise tax. Although the LLC was treated as a partnership for federal and state income tax purposes, the corporation was not doing business in the state by reason of its ownership interest in the LLC, because it did not have the right to manage or control the LLC’s decision-making process.

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