Building on our prior Tax Notes State article that examined the history, purpose and policy rationale behind 80/20 company rules, Partners Jeff Friedman and Ted Friedman, and Associate Stephanie Terinoni, revisit the topic in this installment of “A Pinch of SALT,” taking a closer look at 80/20 companies and challenging several common misconceptions about their
Massachusetts Appellate Tax Board rejects Finnigan sales reallocation for P.L. 86-272 protected affiliate
On July 22, 2026, the Massachusetts Appellate Tax Board held that the Massachusetts Commissioner of Revenue could not use a Finnigan-style sales reallocation rule to include Massachusetts receipts of a P.L. 86-272 protected affiliate in the sales factor numerators of taxable members of its combined group. P.L. 86-272 prohibits a state from imposing a
New Hampshire Court holds unitary combined group member may offset gains using another member’s losses
The Merrimack County Superior Court held that the carryback long-term capital losses of one member of a unitary combined group can be used to offset the long-term capital gains of a different member of the group for purposes of computing the group’s Business Profits Tax. The New Hampshire Department of Revenue Administration argued that the
Legal Alert – Better than a box of chocolates: Foreign dividends included in California sales factor denominator
On February 14, 2024, the California Office of Tax Appeals (OTA) denied the California Franchise Tax Board’s (FTB) request for rehearing in the Appeal of Microsoft Corporation and Subsidiaries (OTA Case No. 21037336). Microsoft is allowed to include 100 percent of its foreign dividend income in its sales factor denominator. This is a huge opportunity
Wading through the water’s-edge combined reporting method
This episode of the SALT Shaker Podcast welcomes a new voice into the mix, Eversheds Sutherland Associate Laurin McDonald. Laurin joins host and Associate Jeremy Gove to describe 80/20 rules used by states in the context of water’s-edge combined reporting, the subject of an article she co-authored in Tax Notes State.
In addition to
South Carolina Court upholds Department’s use of combined reporting under alternative apportionment statute
The South Carolina Administrative Law Court (ALC) held that the South Carolina Department of Revenue could require Tractor Supply and its affiliates to file a combined return notwithstanding that South Carolina law requires corporate taxpayers to file tax returns on a separate-entity basis. In a factually intensive ruling, the ALC found that the Department met
Water’s-edge combined reports and 80/20 companies
The unitary combined reporting method for state corporate income taxation has been adopted by an increasing number of states. While combined reporting requirements vary significantly from state to state, nearly all combined reporting regimes require or allow a water’s-edge method that limits the members of a group return to entities that are incorporated in the
The complex questions of combined reporting
In this episode of the SALT Shaker Podcast, Eversheds Sutherland Associate Jeremy Gove teams up with Associate Cyavash Ahmadi to discuss the complexities of combined reporting, specifically comparing and contrasting the combined reporting regimes in New York and California. They discuss several of the nuances of both states’ systems and even debate what “Joyce v.
Business (Income) As Usual: Minnesota Supreme Court Rules Gain From Sale of LLC is Apportionable Business Income
The Minnesota Supreme Court held that the gain from a corporation’s sale of its majority interest in a limited liability company (LLC) was apportionable business income subject to Minnesota corporate income tax. The Court explained that the corporation conducted its business through operating subsidiaries that were owned by the LLC, and that the corporation and
Much Ado About Nothing! Colorado Supreme Court Holds that Holding Companies with No Property or Employees are Not Includable in a Combined Group
The Colorado Supreme Court issued two decisions simultaneously holding that neither Oracle Corporation nor Agilent Technologies, Inc. were required to include in their combined income tax returns holding companies that did not meet the statutory definition of an “includable C corporation.” To be included in a combined return in Colorado, an affiliate must have more