Tricky question. Nevada does not have an income tax for corporations or individuals, so the issue here is whether incorporating in Nevada will save a foreign resident on his state income taxes in the state ion which he live.
Generally, if you live in California, or any other state that has an income tax, it won't do you much good to incorporate in Nevada, assuming you are setting up a small closely held corporation. In these situations, I recommend forming an S corporation (see new thread I will put together). As the California owner of an S corporation, you will pay California income tax on all income that passes to you from a foreign corporation. So by incorporating an S corp in Nevada, you are not going to save any California income tax. But you will have to go through the added hassle of registering your Nevada corp in California to conduct business in the state, and paying the same annual fee of $800 that California charges its own corporations.
In an S corporation situation for California residents though, there may be some savings from the fact that California also charges a 1 1/2 percent tax on S corporation profits. A California S corporation doing business in other states will pay tax on the profits from all sources. A Nevada S corporation will only pay tax on profits apportioned to activity in California. So an S corporation doing substantiall business outside of California may save some taxes by incorporating in Nevada in this regard.
This story is substantially different if you are forming a big company with profits from outside your state of residence.
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