A nonresident taxpayer opens an intrastate store with presence in California. 40% of the gross receipts are earned within the state. The taxpayer believes that they do not need to file a California return. Is this accurate?

A. Yes - The income is earned from a business outside of the state and the taxpayer pays for any obligations due to California likely in the form of sales tax, property taxes, etc.

B. Yes - They have no filing requirement but they need to make sure that the gross receipts do not exceed 50% or they will have to file a return with the State.

C. No - They have California source income and therefore filing requirements. They report all income and expense items and then multiply the tax rate by 40% on a resident return.

D. No - They have California source income and filing requirements, but they need to make sure that all income and expense items are carefully apportioned and reported using California law amounts and comparisons in order to apportion the appropriate taxable income and expense items for the nonresident return.