Legal Question in Business Law in California

It depends upon how the laws of the new state treat the "redomiciling" process, and probably also, exactly how it is done.

One way it is done is under the provisions of sections 17540.1 through 17540.9 of the California Corporations Code, dealing with "conversion" of California LLCs into other kinds of entity, including non-California LLCs. The provisions of law in these sections are quite detailed and fairly easy to understand, and as you will see from section 17540.9, the effect of a statutory conversion is pretty much to continue the existence. 17540.9(a) provides "An entity that converts into another entity pursuant to this chapter is for all purposes the same entity that existed before the conversion." You would need to compare the California law with the comparable laws of the other jurisdiction to be certain the conversion is recognized and compatible under its laws.

However, there are other ways something more-or-less meeting the description of "redomiciling" might be carried out. These include merger of the existing LLC X into LLC Y of another state, with LLC Y being the surviving entity, and sale of LLC X's assets to LLC Y. Other possibilities exist. The results of these other types of "redomiciling" would be different.

Finally, although the results of redomiciling may be interpreted one way for most or all state-law purposes, I cannot assure you that the IRS would not come up with a different conclusion for some tax-related purpose.