SM LLC Receives CA K-1 but the LLC is not a CA LLC

The SM LLC (which has it's own EIN) is disregarded and the CA activity is reported on the single-member's non-resident (since he is the resident of a state other than CA) individual CA tax return. The CA FTB is saying that the Single Member LLC must file CA tax return due to the CA K-1 it receives. Does that sound correct?

That is the CA FTB position yes.

Read the Swart case and see if your facts match up.

If they do, respond with the facts, reference the Swart case and explicitly state that the LLC is not organized in CA nor doing business in CA.

I've had success in the past doing that. The FTB eventually goes radio silent and the notices stop.