Please consult with your tax advisor on this to verify my opinion. It is my belief that you would pay the business and property related taxes in State A. You would pay any cash received from the property in State B. With regard to incorporating in one state and doing business in another, you will likely have to register as a "foreign" corporation in the state where you are doing business. Foreign to the state where the business in being conducted. Lastly you will have to pay taxes on any gain from the property that comes from principal reduction, while the interest rates are deductible as a business expense.
My belief is that we would all be a lot better off if all states were more responsible in their spending and the tax rates were not so high.
Rob Baird, CA RE Lic. #544165 (One of the oldest, active licenses in CA)
Sep 28, 2010