#LegalBytes: The Official Podcast of Cummings & Cummings Law

Cummings & Cummings Law
  • 0.0 (0)
  • Business

Legal, tax, financial, accounting, and estate planning concepts for business owners and their families

  1. 5h ago

    Moving your California business to a different state doesn't have to be complicated [step-by-step]

    Attorney and CPA Chad D. Cummings notes that California business owners focused only on Proposition 40 may be watching the wrong tax. The billionaire wealth tax appears to be losing support as the November election approaches, but Proposition 3 is moving in the opposite direction. It would make California’s existing higher income-tax rates permanent for single taxpayers earning more than $371,000 and married couples earning more than $742,000. A UC Berkeley Institute of Governmental Studies poll found 54 percent of likely voters supporting the measure and 37 percent opposing it, the only one of seven measures surveyed with support above 50 percent. Those higher rates were enacted in 2012 during a budget deficit, extended in 2016, and are scheduled to expire after 2030. Proposition 3 would remove the expiration date. They currently generate between $5 billion and $15 billion annually. For pass-through owners, business income lands on the individual return, and for taxpayers above $1 million the higher rates already sit on top of California’s separate 1 percent mental-health tax. Recent polls put Proposition 40 at 46 percent and 44 percent support while Proposition 3 polls better. The electorate can reject a one-time 5 percent wealth tax and still make existing higher rates permanent. Florida and Texas impose no personal income tax. Redomestication can move an existing company without dissolving it. When temporary taxes repeatedly become permanent, the rational planning assumption is that today’s burden is the floor, not the ceiling. Learn about exiting your company from California: https://www.cummings.law/redomestication/move-business-out-of-california/

  2. 2d ago

    California exit tax: don't fall victim to misinformation on Reddit or AI

    Attorney and CPA Chad D. Cummings notes that California does not currently impose a general exit tax simply because you move yourself or your business out of the state. Residents are taxed on worldwide income while they are residents, and former residents can remain subject to California tax on California-source income after departure. There is no standalone tax imposed merely because you crossed the state line. The irony is that an owner trying to escape a nonexistent exit tax can create something economically similar by getting the redomestication wrong. Dissolving the California entity too early, forming what is actually a new company, or filing documents that do not accomplish the intended transaction can raise questions about the EIN, an S election, contracts, appreciated assets, and whether California still considers the original entity active. Assembly Bill 2088 in 2020, Assembly Bill 310 in 2021, and Assembly Bill 259 in 2023 all contemplated continued wealth-tax exposure for former residents. None became law. Proposition 40, on the November 3 ballot, would impose a one-time 5 percent tax on qualifying billionaires who were California residents on January 1, 2026, using wealth measured at the end of 2026. It is not current law, and it is not a traditional exit tax because the legal trigger is not the act of leaving. Florida and Texas impose no personal income tax. Redomestication can move an existing company without dissolving it. The expensive risk is not a secret tax on departure. It is botching the legal transition and creating the closest thing you will ever experience to a California exit tax. Learn about the California exit tax: https://www.cummings.law/redomestication/move-business-out-of-california/

  3. 2d ago

    California Prop 40: what business owners need to know (it's not just billionaires)

    Attorney and CPA Chad D. Cummings notes that something unusual is happening with California businesses in his own practice. Cummings & Cummings Law has recorded a 12-fold increase in California-origin companies relocating to Florida, Texas, Wyoming, and Tennessee as California approaches its November 3 vote on Proposition 40. That figure is the firm’s own redomestication activity, not a statewide count. Owners who once treated California domicile as permanent are now asking a simpler question: if the owner has moved, management has moved, and operations increasingly occur elsewhere, why is the company itself still legally domiciled in California? Proposition 40 is not current law. If approved, it would impose a one-time 5 percent tax on the covered net worth of qualifying billionaires who were California residents on January 1, 2026, and business ownership interests would be among the assets subject to valuation. The measure reaches a small number of taxpayers. Owners far below that threshold are still watching the direction of tax, regulation, and administrative cost over the next five, ten, or twenty years. Many never considered corporate domicile something that could be revisited. They formed the company in California years ago and assumed the state on the formation papers was permanent. Changing the company’s state does not erase California taxes arising from continuing California activity, and a move after January 1, 2026 would not, by itself, eliminate potential liability under Proposition 40 if the measure passes and its residency rules apply. Individual residency and corporate domicile are separate questions. Florida and Texas impose no personal income tax. Redomestication can move an existing company without dissolving it. The 12-fold increase does not prove why every owner is leaving. It shows that a growing number are no longer treating California domicile as an assumption that never needs to be reconsidered. Learn more about transferring an LLC or corporation out of California: https://www.cummings.law/redomestication/move-business-out-of-california/

  4. 3d ago

    How to transfer a company out of Alaska and keep the EIN [in under 7 minutes]

    Attorney and CPA Chad D. Cummings notes that a company leaving Alaska does not have to start over. When the transaction is properly structured as a continuation of the same federal taxpayer, the existing company can generally keep the same EIN. The plan of conversion is the document that establishes what continues, what happens to ownership and management, and how the move becomes effective. Alaska’s rules and the destination state’s rules have to work together, and lenders, licenses, or governing documents may require third-party consent before anything is filed. Principals must then approve the plan with the votes required by law and the company’s own documents. Unanimous approval is preferable whenever practical. For a corporation that may mean both the board and the shareholders. For an LLC it may mean members, managers, or both. Destination-state filings come next, and the names of those filings differ by jurisdiction. Profession-specific licenses, sales tax registration, payroll accounts, and local permits may also be required before operations begin. After the destination state accepts the transaction, the outbound filing must still be completed with Alaska, and Alaska tax accounts must be reviewed and closed. Stopping the annual reports is not the same as leaving. Finally, Form 8822-B updates the business address with the IRS. Updating the Secretary of State, the bank, or the Postal Service does not. Florida and Texas impose no personal income tax. Redomestication can move an existing company without dissolving it. The objective is continuity, not a new company that happens to have a similar name. Learn about moving a company out of Alaska: https://www.cummings.law/redomestication/move-business-out-of-alaska/

  5. 4d ago

    Transfer a company out of Alabama and keep the EIN [in 7 minutes]

    Attorney and CPA Chad D. Cummings notes that a company leaving Alabama does not have to start over. When the transaction is properly structured as a continuation of the same federal taxpayer, the existing company can generally keep the same EIN. The plan of conversion is the document that establishes what continues, what happens to ownership and management, and how the move becomes effective. Alabama’s rules and the destination state’s rules have to work together, and lenders, licenses, or governing documents may require third-party consent before anything is filed. Principals must then approve the plan with the votes required by law and the company’s own documents. Unanimous approval is preferable whenever practical. For a corporation that may mean both the board and the shareholders. For an LLC it may mean members, managers, or both. Destination-state filings come next, and the names of those filings differ by jurisdiction. Profession-specific licenses, sales tax registration, payroll accounts, and local permits may also be required before operations begin. After the destination state accepts the transaction, the outbound filing must still be completed with Alabama, and Alabama tax accounts must be reviewed and closed. Stopping the annual reports is not the same as leaving. Finally, Form 8822-B updates the business address with the IRS. Updating the Secretary of State, the bank, or the Postal Service does not. Florida and Texas impose no personal income tax. Redomestication can move an existing company without dissolving it. The objective is continuity, not a new company that happens to have a similar name. Learn more about transferring a company out of Alabama: https://www.cummings.law/redomestication/move-business-out-of-alabama/

  6. 4d ago

    Getting a company out of California and keeping the EIN... it can be done! [step-by-step]

    Attorney and CPA Chad D. Cummings notes that California’s Proposition 40 is being sold as a one-time tax on billionaires, but the people advocating for it are already talking about something larger. Tax Foundation President Daniel Bunn and UNC Tax Center research director Jeffrey Hoopes point to economist Gabriel Zucman, who in September described the measure as a one-time billionaire tax and said wealth taxation was not meant to solve every California fiscal problem. Weeks later he called the California vote potentially the beginning of a global movement. Representative Ro Khanna has separately advocated a national annual wealth tax of 5 percent on billionaires and has argued that the threshold should eventually fall as low as $50 million. The drafters still call the California measure temporary. The policy movement does not. A Tax Policy Network survey of more than 100 experts found about 71 percent of economists and 85 percent of academic accountants opposed the measure, citing migration, administrative difficulty, and constitutional risk. Twelve OECD countries imposed wealth taxes in 1996. Only five still do. In those countries the taxes account for less than 1 percent of GDP. A one-time tax can still create valuation procedures, enforcement machinery, and political precedent that did not exist before. Florida and Texas impose no personal income tax and no wealth tax. Redomestication can move an existing company without dissolving it. For mobile capital, the direction of the tax code can matter as much as the bill on the ballot. Learn about getting your company out of California: https://www.cummings.law/redomestication/move-business-out-of-california/

  7. Oct 23

    Transfer corporation to Texas and keep the EIN [step-by-step]

    Attorney and CPA Chad D. Cummings notes that TSMC is evaluating Texas for a second major U.S. production center. The Phoenix Business Journal reports that one concept would place a Dallas-area campus with as many as six advanced wafer fabs, each potentially costing about $20 billion, for a theoretical total near $120 billion. Nothing is finalized. TSMC has also confirmed discussions with a customer about using capacity at Terafab, the planned 100 million-square-foot complex in Texas associated with SpaceX, Tesla, and xAI. The company says it would participate only if it managed semiconductor fabs connected to the project. Arizona is not being abandoned. TSMC announced another $100 billion there this year, bringing its planned Phoenix commitment to about $265 billion and potentially as many as 12 fabs. The first Arizona fab began high-volume production of advanced N4 chips in late 2024. A Texas expansion would diversify an already enormous U.S. strategy and connect Arizona production with Texas’s technology ecosystem. Third-quarter revenue reached about $33.1 billion, and demand for advanced chips remains strong because of high-performance computing and artificial intelligence. Florida and Texas impose no personal income tax. Redomestication can move an existing company without dissolving it. A modern chip fab brings engineers, suppliers, and specialized equipment with it. If Texas lands even part of this, it becomes one of the places where the physical infrastructure behind artificial intelligence is actually being built. Learn more about transferring a corporation to Texas: https://www.cummings.law/onboard/texas.html

  8. Oct 22

    Keep your EIN when you transfer your company out of California [step-by-step]

    Attorney and CPA Chad D. Cummings notes that California’s proposed billionaire tax almost pushed Mark Zuckerberg out of the state, and Meta changed its capital structure partly so he could stay. The Wall Street Journal reports that Zuckerberg told Meta directors he was evaluating whether to leave while the board negotiated a new stock structure. Proposition 40 would impose a one-time 5 percent tax on the net worth of California residents with at least $1 billion in net assets. Because Zuckerberg’s wealth is concentrated in Meta stock, the company disclosed that passage could produce a significant multi-billion-dollar tax payment and force a sale large enough to cut his voting control from roughly 60.6 percent to about 53 percent. He has earned a $1 annual salary since 2013. Meta created a new class of nonvoting Class C shares that let him raise liquidity without an immediate equivalent sale of voting stock. He can sell up to 20 percent of those new shares, including specifically to pay the California tax if the measure becomes law. In exchange, he agreed to keep his primary residence in the same state as Meta’s headquarters for at least eight years. The proposed tax reached into ownership, voting control, and long-term leadership planning. Florida and Texas impose no personal income tax and no wealth tax. Redomestication can move an existing company without dissolving it. At this scale, tax policy can change where a founder lives and how a company is governed. Learn how to transfer your corporation out of California: https://www.cummings.law/redomestication/move-business-out-of-california/

See All (336)

About

Legal, tax, financial, accounting, and estate planning concepts for business owners and their families

Information

You Might Also Like