apportionment

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By Stephen Burroughs and Timothy Gustafson

The Texas Comptroller determined that receipts received for the delivery of satellite programming to Texas subscribers should be sourced to the site of the subscriber’s set-top box for apportionment purposes. The taxpayer provides direct broadcast satellite television programming to subscribers in Texas and across the United States. For the…

By Stephen Burroughs and Andrew Appleby

The Mississippi Supreme Court held that the taxpayer bears the burden to prove that an alternative apportionment method imposed by the State is arbitrary and unreasonable. Rejecting the taxpayer’s original cost-of-performance filing position, the Department of Revenue applied an alternative apportionment method utilizing market-based sourcing. On appeal, the Chancery…

By David Pope and Pilar Mata

The Texas Comptroller of Public Accounts determined that a taxpayer was not permitted to elect the Multistate Tax Compact’s (Compact) three-factor apportionment formula. This treatment is consistent with prior Texas Comptroller decisions holding that Texas law requires a single-factor apportionment methodology (see Sutherland SALT’s previous articles on this topic…

By Saabir Kapoor and Prentiss Willson

Virginia’s Tax Commissioner denied a taxpayer’s request for alternative apportionment because the taxpayer did not demonstrate by clear and cogent evidence that the statutory apportionment methodology led to an unconstitutional and inequitable result. The taxpayer, a limited partnership headquartered outside Virginia, sold real estate located in its home state…

On June 6, 2013, the Michigan Court of Claims became the second court in the country to hold that the Multistate Tax Compact (the Compact) is a binding multistate compact that cannot be repealed by a separate, subsequent statute. The taxpayer was thus entitled to apportion its income under the former Business Income Tax component…

By Zachary Atkins and Prentiss Willson

A Texas administrative law judge ruled that a taxpayer was not entitled to make an alternative three-factor apportionment election under Article IV of the Multistate Tax Compact (Compact) for Texas franchise tax purposes. The Texas Tax Code requires taxpayers to use a single gross receipts factor to apportion taxable…

By Scott Booth and Timothy Gustafson

The Massachusetts Appellate Tax Board ruled that an out-of-state corporation’s subsidiary qualified as a financial institution by virtue of the lending activities undertaken by the trusts in which it held beneficial ownership and from which the subsidiary derived more than 50% of its gross income. Under Massachusetts’ statutory “catchall”…

By Madison Barnett and Jack Trachtenberg

The Michigan Court of Appeals ruled in two consolidated cases that the state’s estimated corporate income tax assessments were invalid because the taxpayers’ sales factors were improperly calculated using an alternative population-based formula rather than the statutory costs of performance (COP) formula. The two taxpayers were out-of-state book publishers…