So the state tax code literally says, "For the privilege of doing business in the state". [0] Their words, not mine. Whatever way you describe or justify it, th

So the state tax code literally says, "For the privilege of doing business in the state". [0] Their words, not mine. Whatever way you describe or justify it, the state defines it in this way specifically. Also, sole proprietorships can only be for-profit ventures in California. So if you wanted to start a non-profit, you're paying the AMT. [0]: http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-sect-23455.html http://codes.findlaw.com/ca/revenue-and-taxation-code/rtc-se...