In some areas of the law, California isn't into reciprocity because of basic cost/benefit principles. Don't know if that applies here, tho.

You can run into tax problems when you do conversions from one form of entity to another.

Thanks for the info, Naz.

It confirms what I thought. Confirmation is good.

I think the reason California does not allow its domestic entities to convert into foreign entities is because it does not want to lose the revenue from franchise tax. Once the California entity has converted to a foreign entity, then it can't collect anymore tax, unless, of course, the entity then registers as a foreign corporation in California.

I'm just going to set up a Texas Corporation, dissolve the California corporation, distribute the assets to the California shareholders, then have them use these assets to purchase their shares in the Texas Corporation. Normally, I would want to avoid this because it would be a taxable event, but in this particular case, there would probably not be any actual taxes owed.

Why are we doing this in the first place? The corporation moved to Texas and is no longer doing business in California. The easiset thing would have been to leave the California corporation in place, but register it as a foreign corporaiton in Texas, but we did not want to be subject to franchise taxes in two separate states, or be unnecessarily subject to jurisdiction in California.