Income Tax

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The California Court of Appeal ruled that nonresident shareholders were subject to California tax on their pro rata shares of intangible income from an S corporation’s sale of shares in a subsidiary. This sale of intangibles (goodwill of a business) was sourced as business income apportioned at the S corporation level, not as intangible income…

Following a taxpayer’s appeal of a local Virginia county (County) Business, Professional and Occupational License (BPOL) tax assessment, the Virginia Tax Commissioner held that the taxpayer’s remote employees’ payroll was properly excluded from the numerator of the payroll apportionment calculation. The taxpayer was headquartered out of state and maintained offices worldwide, including an office in…

The Indiana Department of Revenue found that a holding company was properly excluded as a member of its affiliates’ financial institutions tax (FIT) combined group return because the company failed to establish nexus with the state.  The Department also decided that for purposes of the FIT, there is no distinction between business and nonbusiness income.…

The California Office of Tax Appeals (OTA) recently sustained the Franchise Tax Board’s (FTB) income tax treatment of an IRC 338(h)(10) election. In return for all the outstanding stock in the target S-Corporation taxpayer, third-party buyers paid an initial (fixed) purchase price and agreed to make deferred contingent earnout payments totaling up to $50 million…

In Virginia Department of Taxation v. R.J. Reynolds Tobacco Co., the Virginia Supreme Court ruled that the taxpayer was entitled to a corporate income tax refund because leaf tobacco stored in the taxpayer’s Virginia warehouse was not “used” by the taxpayer for purposes of inclusion in its Virginia property factor.

The taxpayer stored leaf…

On February 4, Idaho Governor Little signed into law HB 436, which will decrease individual and corporate income tax rates. HB 436 was passed and signed into law in just over 20 days after being introduced.  Specifically, the legislation lowers the corporate income tax rate from 6.5% to 6% and consolidates the personal income…

The Washington Administrative Review and Hearings Division (the Division) of the Department of Revenue held that payments between affiliated entities could not be deducted from “gross income” subject to the business and occupation tax (B&O Tax). Each of the taxpayers, three affiliated entities falling under the same parent company umbrella with each providing investment management…