The Virginia Court of Appeals recently held that the Virginia Department of Taxation cannot make it a requirement for a corporation to include the income and factors of a 17% owned LLC with its own income and factors as a unitary business. The taxpayer obtained the interest in question in exchange for the sale of
business income
New York State proposes changes to GILTI
On January 8, 2025, a group of New York State Senators introduced S953, which proposes to increase the gross amount of GILTI under IRC § 951A included in the New York State business income base from 5% to 50%. This increase to corporations’ tax base is done by reducing the amount of GILTI excluded…
Arkansas Supreme Court holds that spin-off interest is an allocable, not apportionable, deduction
The Arkansas Supreme Court held that a taxpayer’s interest expense is allocable to Arkansas resulting in a refund. This decision is an example of a taxpayer successfully arguing that it can fully deduct – rather than apportion – its interest expense in its state of commercial domicile.
Arkansas adopted the Uniform Division of Income for…
Michigan Court of Appeals holds MBT business loss carryforward cannot be claimed on taxpayer’s first corporate income tax return
On January 19, 2023, the Michigan Court of Appeals held that a taxpayer, transitioning from the Michigan Business Tax (MBT) to the Corporate Income Tax (CIT), cannot claim prior MBT business losses on its first CIT return. For tax years 2008 through 2011, the taxpayer filed MBT tax returns and claimed employment tax credits. In…
Giving Credit Where It Isn’t Due: Arkansas Office of Hearings and Appeals Treats Sales of Tax Credits as Business Income
On June 13, 2018, an Arkansas Administrative Law Judge concluded that a taxpayer’s proceeds from dispositions of tax credits were apportionable business income. In Arkansas, business income arises from either: (1) transactions and activity in the regular course of the taxpayer’s business (the transactional test); or (2) income from the acquisition, management and disposition of…
New York State Budget Adopts Substantial Changes in Response to Federal TCJA
The New York Legislature passed its 2018-2019 Fiscal Year budget on March 30, 2018, which is expected to be signed into law by Governor Cuomo. The Legislature responded to the Tax Cuts and Jobs Act (TCJA) passed by the United States Congress late last year by excluding IRC § 965 repatriated income from New York…
Moving into Worldwide Waters? States Reaching Beyond the Water’s-Edge
Many states require or permit affiliated businesses to report their income to the state in a combined group return. In their article for Bloomberg Tax, Eversheds Sutherland attorneys Maria Todorova, Justin Brown and Samantha Trencs discuss some of the complexities of combined reporting related to the inclusion of foreign entities in a combined…
Tread Lightly: New Mexico Finds Gain from Stock Sale Is Business Income
The New Mexico Administrative Hearings Office affirmed the Taxation and Revenue Department’s assessment to Agman Louisiana Inc. based on the taxpayer’s gain from the sale of stock of a corporation in which the taxpayer owned less than a 50% interest. The Hearings Office ruled that such gain was apportionable business income subject to New Mexico…
Congress Holds Hearing on Legislation to Limit State Taxation
On July 25, 2017, the US House of Representatives Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law conducted a hearing on “No Regulation Without Representation: HR 2887 and the Growing Problem of States Regulating Beyond Their Borders.” This hearing was important for several reasons:
- State tax nexus legislation has been one of the
…
California Legislature Passes Bill That Creates Two New Tax Agencies and Reduces the Board of Equalization’s Powers
On June 15, the California Legislature passed Assembly Bill 102, the Taxpayer Transparency and Fairness Act of 2017, which divests the California State Board of Equalization (BOE) of several key functions and creates two new government agencies—the California Department of Tax and Fee Administration and the Office of Tax Appeals—to perform many of the BOE’s…