Photo1.jpgMeet five-year-old Eleanor and two-year-old Casper, the beloved pets of Kathryn McClure, Senior State Tax Director at NBC Universal (a Comcast company). Eleanor (Ellie) is a delightful mix of Golden Lab, Keeshond, West Highland Terrier and Dachshund. She came to Kathryn through the Golden Retriever Rescue. Ellie is highly intelligent, very stubborn and resourceful; she can open dog crates, wrought iron gates, the pantry door (and steal the greenies) and has an extensive vocabulary. She loves getting dressed up; she has a tutu for fancy events and a wide variety of sweaters. If you show her a sweater and she wants to wear it, she will let you know and then take it off by herself when she doesn’t want it anymore.

Unfortunately for Ellie, the dreaded mange, which had affected Ellie’s litter, continued to surge again and again. When Kathryn asked the vet what else could be done to help Ellie (as well as two cats who had stress-related health issues because they hate Ellie), the vet’s response was “get a puppy, a very young one. Give Ellie a job and wear out her brain.” Enter Casper, aka The Big Goomba. 

Photo2.jpgCasper is an English Cream Golden Retriever who was eight weeks old and weighed eight pounds when he entered Kathryn’s life. Casper is now a sturdy and trim 105-pound giant; he could be taken for a small Great Pyrenees. He is Kathryn’s third Golden and everyone feels relaxed around him. Casper is a little odd about some things. For example, he will not walk from the hall into the living room; he has to back up like a truck every single time. Casper also is terrified of the cats. One of the cats will sit at the end of the hallway and trap him. He won’t walk past her. Instead he sits and cries for help. Casper has a sense of humor (Ellie doesn’t) and makes Kathryn laugh every day by just being a big goofball. And that horrible mange that plagued Ellie for years? She has not had a single outbreak since Casper entered the family; he is literally worth his weight in gold!  

We are thrilled to feature Eleanor and Casper as our August Pets of the Month!

To submit YOUR pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click the Pet of the Month in the drop-down, then click “Submit A Pet.”

By Debra Salvato and Scott Wright

The Minnesota Tax Court recently held that the annual limitation on net operating losses of an acquired corporation is to be applied only once to a taxpayer’s pre-apportioned income. The taxpayer, Sinclair Broadcast Group, Inc., acquired a company with significant losses to which Section 382 limitations applied. The Commissioner took the position that Sinclair was required to apply Section 382 limitations twice—once on Sinclair’s state net income before apportionment and again to Sinclair’s state taxable income after apportionment under the new corporation’s present year apportionment ratio. The Tax Court rejected the Commissioner’s interpretation, finding that Minnesota’s net operating loss statute requiring Section 382 limitations to be “applied to net income, before apportionment…” was clear and unambiguous. The taxpayer’s position was also supported by the larger policy purpose behind the adoption of Section 382. Sinclair Broadcast Group, Inc., and Subsidiaries v. Comm’r of Revenue, No. 8919-R (Minn. Tax Ct. Aug. 11, 2017).

By Samantha Trencs and Carley Roberts

In a private letter ruling, the Colorado Department of Revenue stated that an affiliated group of corporations engaged in distinctly different commercial activities requiring different apportionment methodologies under Colorado law could use the allocation and apportionment methodology set forth in two previous private letter rulings (PLR-11-002 and PLR 15-005) to calculate the group’s combined income tax liability. Under the rulings, the Department set forth the following steps to calculate the affiliated group’s Colorado income tax liability: (1) eliminate all intercompany transactions; (2) separately calculate the modified federal taxable income for each subgroup; (3) separately allocate income and loss and apportion any apportionable business income or loss using the respective apportionment methodology and factors for each subgroup; (4) add together all business income or loss allocated and apportioned to Colorado for each subgroup to produce the aggregated Colorado tax base; and (5) apply the income tax rate to the aggregated tax base. The Department also noted it is in the process of adopting a new methodology via amendment to its administrative rules and that once these rules become effective, the affiliated group must calculate its combined income tax liability consistent with the amendment. Colo. Dep’t. of Rev., PLR-17-001 (Apr. 27, 2017).

To raise revenue and tackle health concerns, a number of localities have imposed sugar-sweetened beverage (SSB) taxes. However, localities may have limited guidance on how these taxes are administered. Read this Bloomberg BNA article, by Eversheds Sutherland (US) attorneys Jonathan Feldman and Alla Raykin, which discusses:

  • Sugar-sweetened beverage tax background
  • Why are local SSB taxes so problematic?
  • Implications for taxpayers

View the full article.

By Samantha Trencs and Jeff Friedman

The Minnesota Supreme Court respected a foreign entity’s federal check-the-box election for the purpose of determining which entities were included in the Minnesota combined franchise tax reports. The court held that including the income and apportionment factors of a foreign entity that elects under federal tax law to be disregarded as a separate entity did not violate Minnesota’s water’s edge rule. The court determined that the federal treatment as a disregarded entity also meant that it was disregarded for Minnesota franchise tax purposes, and it was therefore treated as part of its domestic parent. Ashland Inc. v. Minnesota Comm’r of Revenue, No. A16-1257 (Minn. Aug. 2, 2017).

WASHINGTON—Eversheds Sutherland is pleased to announce that Associate DeAndre R. Morrow has been selected as one of The National Black Lawyers Top 40 Under 40. He joins an elite group of attorneys from Washington DC and across the country as members of the organization composed of outstanding black attorneys under the age of 40 who exemplify superior leadership and achievements in the legal industry and within their communities.

View the full press release

By Ted Friedman and Charlie Kearns

On August 3, 2017, the Arizona Court of Appeals held that the issuance of a sales tax assessment by the City of San Luis violated the due process rights of a company that calculated its tax liability based on publicly available versions of the tax code that showed a franchise fee credit was still in effect, despite the credit having been repealed by an unpublished ordinance. The City passed an ordinance that repealed a tax credit for franchise fees paid by public utilities, but the City did not amend, or attach the ordinance to, the tax code on file with the City Clerk, the Arizona Department of Revenue, the League of Arizona Cities and Towns or the Municipal Tax Code Commission to reflect the repeal. The company calculated its tax liability using the repealed franchise fee tax credits, and the City issued an assessment for additional sales tax, penalties and interest. The Court of Appeals explained that it “violates taxpayers’ due process rights for a taxing authority to play hide-and-seek with taxpayers by publishing an incorrect version of a tax code, not attaching amendatory ordinances, and then penalizing taxpayers when they abide by the published code.” Ariz. Pub. Serv. Co. v. City of San Luis, No. 1 CA-TX 16-0009 (Ariz. Ct. App. Aug. 3, 2017).

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The quarterly Eversheds Sutherland SALT Scoreboard tallies significant state and local tax litigation wins and losses. In this videocast, Charles C. Capouet and Hanish S. Patel share the second quarter highlights from the SALT Scoreboard, including a breakdown of corporate income tax and sales and use tax case results, an overview of the most significant cases of the quarter, and a recap of the Maine Supreme Judicial Court’s holding in State Tax Assessor v. MCI Communications Services, Inc. Stay tuned for our Eversheds Sutherland SALT Scoreboard 2017 Year in Review!

View the SALT Scoreboard Videocast.

The Eversheds Sutherland SALT Team is always excited to see what kind of pets our clients and friends have. Our team features a different pet at the end of every month, and we want to feature YOURS! Featured pets will receive a fun prize from the SALT Team. The deadline for August submissions is Friday, August 25.

To submit your pet to be featured, visit the Eversheds Sutherland SALT Shaker App, click “Pet of the Month” in the drop-down, then click “Submit A Pet.”

Don’t have the app? It is available for download in the Apple App Store, Google Play and the Amazon Appstore.

View previously-featured furry friends.

By Maria Todorova and Charles Capouet

The Rhode Island Division of Taxation ruled that a monthly or annual membership fee that allowed customers to access various benefits associated with shopping on a taxpayer’s website—including discounted shipping benefits; streaming or downloading movies and music; photo storage; and access to games and in-game content—is subject to sales and use tax. The Division reasoned that although membership fees are generally not taxable in Rhode Island, the membership fee charged by the taxpayer constituted a bundled transaction whose true object was ready access to non-taxable and taxable items. The Division also ruled that a free one-month trial subscription was not subject to sales and use tax because no consideration was paid for the transaction. Ruling Request No. 2017-01, R.I. Div. of Tax., Mar. 31, 2017.