Page 4 of the pdf.https://www.ftb.ca.gov/forms/2018/18_568bk.pdfDoing Business – A taxpayer is doing business if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California or if any of the following conditions are satisfied:The taxpayer is organized or commercially domiciled in California.The sales as defined in R&TC Section 25120(e) or (f), of the taxpayer in California, including sales by the taxpayer’s agents and independent contractors, exceed the lesser of $583,867 or 25% of the taxpayer’s total sales.The real property and tangible personal property of the taxpayer in California exceed the lesser of $58,387 or 25% of the taxpayer’s total real property and tangible personal property.The amount paid in California by the taxpayer for compensation, as defined in R&TC Section 25120(c), exceeds the lesser of $58,387 or 25% of the total compensation paid by the taxpayer.In determining the amount of the taxpayer’s sales, property, and payroll for doing business purposes, include the taxpayer’s pro rata share of amounts from partnerships and S corporations.

@Aaron MarxThe LLC has to pay(account for the income )you and your wife pro rata, based on the percentage of ownership in the LLC wether it is a partnership or “S” Corp.

And even if there’s not, the seller will have closing costs, such as title insurance, pro rata property taxes, transfer fees, etc.

And that's money down, not including loan closing costs.By the time you have brought to closing: Lender fees, points, Title fees and pro-rata interest payment until the end of the month, then depending on the size of the loan you are probably looking at, extremely roughly ~$7K+ in closing costs alone.Best wishes on your endeavors.

They asked about a pro-rata return of the rent which I said I’d consider if they left the condo clean and damage-free.

Additionally, depending on the market, you can allocate to each tenant their pro rata share of the common areas square footage in an office building.

After that, distribute the returns at a market rate based on who's doing the work.For example, assume the following.Land Contribution: $10,000Cash Equity: $30,000Total Equity: $40,000Project Loan: $160,000Total Sources of Funds: $200,000Land: $10,000Hard Costs: $145,000Soft Costs: $30,000FF&E: $15,000Total Uses of Funds: $200,000The joint venture can then be structured as pro rata split to an 8% preferred return and 50/50 split on everything thereafter if you are doing the work.

If they do, they are either participating as if they were an investor, which means they are subject to the same terms as everyone else including preferred returns, or they invest separately and have a 100% claim on the pro-rata entity-level cash flow which makes a preferred return on their capital moot.

But it should have been nipped in the bud earlier if there was equity...Hawaii (HI Rev Stat § 667-31 (2016))(b) From the sale proceeds, after paying all liens and encumbrances in the order of priority as a matter of law, after paying the foreclosing mortgagee's attorney's fees and costs, after paying the fees and costs of the power of sale foreclosure, and after paying the moneys owed to the foreclosing mortgagee, the balance of the sale proceeds shall be distributed by the foreclosing mortgagee to junior creditors having valid liens on the mortgaged property in the order of their priority and not pro rata.

If so, I would guess an offset of the deposit pro-rata per day might be reasonable.