Law Offices of Connie Yi, PC - estate planning
Tell Us About Your Case

For the safety of our community, clients and staff, we have suspended all in-person meeting effective March 17, 2020. All consultation meetings will be via Phone or Zoom Video Conferencing. Please contact us at 925-484-0888 or email us directly at [email protected] to schedule the consultation.

Bay Area Estate And Tax Planning Law Firm
Estate Planning
Trust Administration and probate

1993 California tax law ruled illegal

| Aug 30, 2012 | Uncategorized |

California is in competition with other states. We want the smartest children to come to our colleges. We would like people to buy our oranges rather than Florida’s. And we are rightfully proud of Silicon Valley’s reputation, Hollywood’s entertainment value and our beautiful national parks.

In 1993 California legislators created a tax break to keep California wealth and California business people in the state. It is a capital gains tax break and it has recently been ruled illegal by a state appeals court.

The tax break worked by exempting California small business owners from capital gains tax when a business is sold, as long as the gains are plowed back into another small business of which 80 percent of the property or the business was in California.

The law was challenged by an Orange County man who sold stock in an Internet start-up business (for $2.3 million) and invested it in several other small businesses. He claimed the tax break on his taxes but the Franchise Tax Board did not let the man defer his taxes. The man paid his taxes, penalties and interest in 20007 but sued for a refund. The lawsuit for his refund is the lawsuit which determined that the California capital gains tax break is illegal.

There are other similar “stay in our state” tax breaks that have also been declared illegal by other courts in other states.

Tax laws are always subject to change by either the state or federal government or through case law. If you are in doubt about a tax issue, it is a wise idea to consult with a legal tax professional that is up-to-date on such matters.

Source: SFGate, “California tax break ruled illegal, Bob Egelko, Aug. 29, 2012

At our San Francisco Bay law office, we represent clients with tax issues including tax law changes, tax litigation and capital gains tax issues.

Archives

FindLaw Network

Recent Blog Post

Even a fortune can disappear without sound estate planning

Some figures baffle.Like the speed of light. Like the age and size of the universe. And like estimates pegging the personal fortunes of America's richest families.Consider this imagery relevant to the storied Vanderbilt family for a moment: a pile of money equaling...

Remarrying couples unquestionably need to focus on estate planning

Many remarrying California individuals fail to timely consider and update existing estate plans to reflect new realities.Don't be one of them. Many remarrying California individuals fail to timely consider and update existing estate plans to reflect new...

View More Blog Posts