The Arizona Court of Appeals upheld a broad definition of business income, adopting both the transactional and functional tests. The Court of Appeals stated that business income includes both income arising from transactions in a taxpayer’s regular course of business (the “transactional test”) and income from the acquisition, management, or disposition of tangible and intangible property used in a taxpayer’s regular course of business (the “functional test”). The Court of Appeals determined that the functional test was necessary because taxpayers would not include gain upon sale even though they could deduct business expenses related to the property before the taxpayer sold it. The Court of Appeals also rejected the liquidation exception stating that any such exception is inconsistent with the functional test. Harris Corp. v. Ariz. Dept. of Rev., Dkt. No. 1 CA-TX 11-0006 (Nov. 26, 2013).