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I never said I wanted them to bend any rules. All I asked about was after the fact payroll entry and if their software provided a means to do so. The response was uncalled for and entering after the fact payroll is certainly not bending any rules and had nothing to do with whether my friend/client had any prior knowledge of payroll functions which they did.

If the CA payroll exceeds $56K, then there is nexus. "The amount paid in California by the taxpayer for compensation, as defined in subdivision (c) of R&TC 25120, exceeds the lesser of $50,000[1] or 25 percent of the total compensation paid by the taxpayer. For the conditions above, the sales, property, and payroll of the taxpayer include the taxpayer's pro rata or distributive share of pass-through entities. "Pass-through entities" means partnerships, LLCs treated as partnerships, or S corporations." https://www.ftb.ca.gov/businesses/Doing-Business-in-California.shtml The original $50K in 2011 jas been indexed for inflation.

I deal with a lot of NY issues, and YES an employee in a different state working as an employee for a NY employer DOES create nexus for the employer in that other state. Judging from my CA clients, CA is as aggressive as NY. You can try. Good luck. Most states now use a single/sales criteria for nexus, unless it benefits them to use Sales/Employees/Property instead.

In my experience, the CA FTB is probably the most aggressive state revenue agency in the country. You can try claiming your client doesn't have nexus and maybe it will slide by. My opinion is that they do have nexus.

I had a similar situation a few years ago with Ca employee working for a Florida employer. The employer sent a letter to FTB and never heard another word. Whether they filled out the form you mentioned I don't know, but all taxes and SDI were paid.

The courts have held HVAC as personal property in cases where the primary purpose is to maintain the proper temperature and humidity of equipment. Such as in the case of Piggly Wiggly v Com. where primary purpose of HVAC was to meets the needs of refrigeration equipment instead of the comfort of customers and employees.

Thanks! I don't know why I'm never notified when I have a response or comment to something I posted, and I was not checking it like I should have. Now I can wrap this one up. They will be disappointed because I'm sure they think, like every other home business taxpayer, it would be expensed. I told them from the beginning that it would be depreciated. I just wasn't sure of the method. They'll never recover the expenses for both of these items. Oh well, that's life in the big city. Thanks again for all the responses.