Monday, July 23, 2012

SB323/ Not Operating Loss carry back

SB 323 (Vargas) is a bill working its way through the California Legislature and will be taken up when the Legislature reconvenes in August. It would enact a new limited liability company (LLC) law effective January 1, 2013 and repeal the present LLC law effective January 1, 2015, so that all LLCs formed since 1994 (the effective date of the present LLC law) would be invalidated unless converted to the new law.

This would require every LLC to revise its charter and operating agreement to conform to the new law, or become defunct. This could cause considerable confusion and possible litigation.

It is believed that many startup companies and other California small businesses would be affected by this law. There is no grandfather option in this legislation.

Is your company an LLC? Is this something Small Business California should weigh in on?

In a past email I indicated there is legislation to eliminate Net Operating Loss carry backs. We have confirmed the legislation does not eliminate Net Operating Loss carry forwards. Many of you have indicated you would send a letter of opposition to this. Small Business California is awaiting a report from the Franchise Tax Board but plan on sending a letter of opposition in the next week.. For those of you that indicated you would also send a letter of opposition we will be getting back to you . If you did not respond and want to oppose please let me know.

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