Out of State (Oregon) LLC

We were in California for 2.5 days at a trade show in 2010. Our company is an LLC in Oregon. We are required by the show promoter to have a Board of Equailization number, and we pay sales tax to California for the gross earned at the show. Just recently we received a demand for income tax from the Calif. State Franchise Tax Board requiring us to pay not only income tax but an $800 annual tax, plus penalties and interest. Is this legal? Is the FTB targeting just LLC's from Oregon or all out of state businesses?

Your LLC is required to register in CA as a foreign entity if it enters into "repeated and successive transactions" within the state. (Please see Doing Business in CA? Be Sure to Register.)

I don't know how many transactions your company entered into, and there is no specific test for how many transactions over what period of time constitute "repeated and successive". If there were just a few transactions, perhaps you can convince the FTB that they were not "repeated and successive".

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

I believe you need a help of a tax professional here. FTB assumes you're "doing business in California", and there are very specific rules for trade shows. You need to have a professional handle this for you. This is nothing to do with your state of formation, Oregon or Delaware - doesn't matter at all. Any LLC/Corporation/LP/LLP doing business in California has to pay the $800.