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
corporate income tax
Nevada Department of Revenue cannot backtrack from its email agreement
The Nevada Supreme Court found that the Nevada Department of Revenue’s (Department) attempt to ignore its email correspondence with a taxpayer violated “basic notions of justice and fair play.”
A Nevada statute requires that, in order to file a petition for judicial review of a tax deficiency, a taxpayer must first either pay the entire…
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…
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…
Pennsylvania Supreme Court holds Nextel decision does not apply retroactively
- In Nextel Communications
New York Tax Appeals Tribunal denies sale treatment to oil swaps
On November 18, 2024, the New York Tax Appeals Tribunal (TAT) determined that Sunoco, Inc. (R&M) Combined Affiliates (Sunoco) was not entitled to include receipts from buy/sell agreements in its New York receipts factor because they were derived from inventory exchanges, not bona fide sales for monetary consideration.
Sunoco refined and marketed oil, and entered…
Massachusetts ATB determines that bank holding companies are entitled to Massachusetts research tax credits
The Massachusetts Appellate Tax Board (ATB) struck down a $17.9 million assessment and held that State Street Corp. (State Street), a bank holding company under the Bank Holding Company Act of 1956, was entitled to approximately $14 million in Massachusetts research tax credits because Massachusetts state tax provisions did not prohibit bank holding companies from…
Florida Court of Appeal holds state’s NOL deduction limit tracks federal threshold
The Florida First District Court of Appeal held that Florida’s annual corporate income tax net operating loss (NOL) deduction limit is the same as the federal limit. Verizon Communications Inc. (Verizon) accumulated federal and state NOLs upon its 2006 acquisition of MCI, Inc. ($15 billion federal and $267 million Florida NOLs) and 2011 acquisition of…
Missouri AHC determines REIT dividends are deductible
The Missouri Administrative Hearing Commission held that real-estate investment trust (REIT) dividends from sources within Missouri are deductible from Missouri income.
The decision involved a REIT that generates income from mortgages secured by real property. The REIT made distributions of profits derived from sources within Missouri to its controlling interest holder. The controlling interest holder…
Alabama Tax Tribunal: Interest payments not added back under Alabama’s subject-to-tax exception
On February 26, 2024, the Alabama Tax Tribunal (Tribunal) held that Huhtamaki Inc. (Huhtamaki), a packaging manufacturer, is not required to add back interest payments indirectly made to foreign affiliates through a U.S. parent company.
Under Alabama’s add-back statute, a corporation must add back otherwise deductible interest expenses directly or indirectly paid to a related…