The Massachusetts Appellate Tax Board (ATB) found that an out-of-state footwear company qualified as a “manufacturing corporation” for purposes of the state corporate excise (income) tax despite outsourcing the manufacturing of its shoes to third parties. The consequence of the “manufacturing corporation” classification was that the taxpayer had to use a single-sales factor apportionment formula
Michigan Tax Tribunal holds business with only one location entitled to apportion income
On April 17, 2025, the Michigan Tax Tribunal held that a business with only one brick and mortar location was entitled to apportion its income on its city income tax return because it engaged in business activities outside of the city. In this case, a business with only one brick-and-mortar location (located in Lapeer, Michigan)
California considers single sales factor for banks and financials
The California Franchise Tax Board’s method of taxing banks and financial institutions is consistently complex, and a bit messy. This complexity would worsen under the January budget proposal of California Governor Gavin Newsom to tax banks (and savings and loans) using single-sales-factor apportionment.
In this installment of A Pinch of SALT, published by Tax Notes
New York Tax Appeals Tribunal upholds DTA ruling on deferred fees and appreciation allocation
The New York Tax Appeals Tribunal affirmed a Division of Tax Appeals (DTA) ruling, holding that deferred compensation earned by a partnership should be allocated to New York based on the business allocation percentage (BAP) from the year in which the services were performed, rather than the year in which the deferred income was recognized.
California governor proposes changes to financial institution taxation
In his draft budget plan for Fiscal Year 2025-2026 released on January 10, 2025, California Governor Gavin Newsom proposed to bring financial institutions in line with most other corporate taxpayers when it comes to apportioning multistate income. Banks and “financial corporations” currently use a three-factor apportionment formula consisting of property, payroll and sales to apportion
Inequitable barriers to equitable apportionment
Apportionment formulas sometimes produce unfair results. To rectify the unfairness, taxpayers can (and should) use an alternative apportionment formula to apportion corporate income. In their article for TEI’s Tax Executive journal, Eversheds Sutherland attorneys Jeff Friedman and Sebastian Iagrossi focus on a troubling aspect of alternative apportionment— some states require pre-approval of an alternative apportionment
Ambiguous allocation and apportionment statutes should favor taxpayers
Courts have formulated more than a dozen legal canons of statutory construction specific to tax.
In the October 2024 installment of “A Pinch of SALT” in Tax Notes State, Eversheds Sutherland attorneys Jeff Friedman, John Ormonde and Kelly Donigan examine the application of statutory construction principles to conflicts involving allocation and apportionment statutes.
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South Carolina Court holds receipts from mortgage activities and credit cards should be sourced to state
The South Carolina Administrative Law Court upheld a bank tax assessment that was based on adjustments made by the Department of Revenue to a taxpayer’s sales factor and tax base. The taxpayer, a national bank, offered a range of banking and trust services, and generated income by providing residential mortgages and other loans, and issuing
Texas Court of Appeals upholds franchise tax apportionment rule
The Texas Court of Appeals for the Third District upheld the Comptroller of Public Accounts’ Franchise Tax apportionment rule as facially valid, including the provisions apportioning receipts to Texas where the seller ships or delivers property in Texas—regardless of whether the buyer is ultimately located in the state.
The taxpayer, a company that transports and
Landmark state tax cases: The impact of Moorman on apportionment
In this episode of the SALT Shaker Podcast, Eversheds Sutherland Associate Jeremy Gove welcomes Partner Jeff Friedman for another discussion of a landmark state tax case.
For this installment, Jeff and Jeremy jump into Moorman Manufacturing Co. v. Bair, discussing the history of 3-factor apportionment, and how the Moorman decision paved the way for