On July 21, 2022, the Regular Division of the Oregon Tax Court ruled that flights operated by all members of a unitary group are included in a taxpayer’s departure ratio and that receipts for selling tickets on flights operated by third parties do not constitute transportation revenue under the state’s special industry apportionment rules for
Corporate Excise Tax
What service? Massachusetts Appellate Tax Board rules that SaaS provider is a manufacturing corporation required to use single sales factor apportionment
By Eric Tresh & Annie Rothschild on
Posted in Digital Economy
The Massachusetts Appellate Tax Board found that software-as-a-service (SaaS) provider Akamai Technologies Inc. was a manufacturing corporation, rather than a service provider. Akamai, headquartered in Massachusetts, provided software-based cloud services allowing customers to manage the delivery of web and media content over the Internet. In Massachusetts, a manufacturing corporation must use single sales factor apportionment,…
Massachusetts Appellate Tax Board Rules Non-Massachusetts S Corporation’s Subsidiary Sale Subject to Massachusetts Tax
By Charlie Kearns & Charles Capouet on
Posted in In the News
On October 23, 2020, the Massachusetts Appellate Tax Board ruled that capital gain from a Florida S corporation’s sale of a subsidiary Massachusetts LLC was subject to Massachusetts corporate excise tax and nonresident composite tax. The taxpayer contended that the U.S. Constitution’s Due Process and Commerce Clauses forbade Massachusetts from taxing the income because the…
Tennessee Court of Appeals Holds Legal Malpractice Settlement Proceeds are Taxable Business Earnings
By Charles Capouet & Scott Wright on
Posted in Noteworthy Cases
The Tennessee Court of Appeals held that a manufacturer’s proceeds from a legal malpractice action are business earnings subject to the Tennessee excise tax. The malpractice action arose when the taxpayer’s attorneys improperly filed a European patent. The damages awarded in settlement of the claim were based on profits the taxpayer would have earned if…
Birds of a Feather Must Flock Together: Oregon Tax Court Holds that Airlines in a Unitary Group Must Aggregate Departure Data
By Elizabeth Cha & Michele Borens on
Posted in Noteworthy Cases
On February 28, 2020, the Oregon Tax Court held that multiple airlines operating as a unitary business should aggregate not only transportation revenue but also other metrics, such as departure ratios, that are factored into the apportionment formula used by Oregon for airline taxpayers. Oregon regulations provide a modified single sales factor apportionment rule for…
More Than Smoke: Oregon Tax Court Holds Cigarette Manufacturer’s In-State Activities Exceeded P.L. 86-272
By Todd Betor & Charles Capouet on
Posted in Income Tax
On February 26, 2019, the Oregon Tax Court held that an out-of-state cigarette manufacturer’s in-state activities violated Public Law 86-272, resulting in the manufacturer being subject to Oregon’s corporation excise tax. P.L. 86-272 prohibits any state from imposing a net income tax on out-of-state taxpayers that generally limit their in-state business activities to solicitation. The…
Massachusetts ATB Finds that Indiana Utility Receipts Tax Not a Deductible Transaction Tax for Massachusetts Corporate Excise Tax
By Samantha Trencs & Open Weaver Banks on
Posted in In the News, Tax Reform
The Massachusetts Appellate Tax Board disallowed a deduction for Indiana utility receipts tax (URT) paid by a natural gas distribution operator with operations in Indiana. The deduction for the URT was disallowed, for purposes of computing Massachusetts net income for corporate excise tax, because the URT is not a deductible “transaction tax.” The Board found…