Shaking things up in state and local tax
Shaking things up in state and local tax
By Nick Kump and Marc Simonetti
The Georgia Department of Revenue (Department) released a letter ruling stating that a taxpayer’s sales of computer software and related services were not subject to sales and use tax. The taxpayer sold bundled packages for a single price that included electronically transferred computer software with corresponding updates and upgrades…
By Todd Betor and Eric Coffill
On January 20, a Denver trial court ruled that Agilent Technologies World Trade, Inc. (World Trade), a holding company with no property or payroll of its own, cannot be included in its parent’s combined corporate income tax return. The court found that World Trade did not meet the definition…
By Mike Kerman and Madison Barnett
The Indiana Tax Court granted summary judgment to Rent-A-Center East, Inc. (RAC), finding that the Department of Revenue’s determination that RAC and two affiliates should have filed a combined return was improper. This case was on remand from a prior Indiana Supreme Court ruling (please see our prior coverage…
By Stephen Burroughs, Jonathan Feldman and Open Weaver Banks
In a significant taxpayer win, the Massachusetts Appellate Tax Board (ATB) held that intercompany interest payments from a wholly owned subsidiary to Massachusetts Mutual Life Insurance Company (MassMutual) were bona fide loans and were deductible for excise tax purposes. The subsidiary (HoldCo) was a holding…
By Zachary Atkins and Douglas Mo
A California Court of Appeal held that the sale of real property to a lessee having an original lease term of more than 35 years did not result in a change in ownership triggering reassessment for property tax purposes. Proposition 13 established a 2% per-year ceiling on increases in…
By Evan Hamme and Timothy Gustafson
The Maryland Tax Court held that the Comptroller can subject an out-of-state subsidiary holding company to tax because the subsidiary did not have real economic substance separate from its parent, which conducted business in the state. The Comptroller assessed ConAgra Brands, Inc. (Brands) for the 1996-2003 tax years, arguing…
A New York Tax Appeals Tribunal Administrative Law Judge (ALJ) recently determined that a federal savings and loan association was not required to include a subsidiary, which was formed as a Connecticut passive investment company, in its combined New York City bank tax return. In the Matter of the Petition of Astoria Financial Corporation &…
Today, the Maryland Court of Appeals held that Maryland may tax out-of-state Delaware holding companies that license patents to their parent company, which was doing business in Maryland. Gore Enterprise Holdings, Inc. v. Comptroller of the Treasury and Future Value, Inc. v. Comptroller of the Treasury. The ramifications of this decision are significant because…
Taxpayers have just begun to struggle with the application of states’ related party addback provisions. On January 31, 2011, the Massachusetts Appellate Tax Board (ATB) issued its decision in the first Massachusetts case that addressed the application of the related party addback provision to an intercompany interest and royalty expense. Kimberly-Clark Corp. et al. v. Comm’r of Revenue, Mass. App. Tax Bd., Dkt. No. C282754 (Jan. 31, 2011). In Kimberly-Clark, the ATB addressed the deductibility of interest expense related to the company’s cash management system and royalties related to intellectual property.
The Massachusetts Department of Revenue (Department) assessed the taxpayer based on a denial of the interest expense deduction for pre-addback and addback tax years. The ATB upheld the Department’s denial of the expense deduction because it determined that, based on the preponderance of the evidence, the taxpayer’s cash management system loans did not constitute bona fide debt. The ATB determined that the loans were not debt because the taxpayer had no expectation that the cash advances would be repaid, and there were no security, default, or collateral provisions.Continue Reading Kimberly-Clark Gets No “Huggies” from Massachusetts Appellate Tax Board
In IDC Research, Inc. v. Comm’r of Revenue, No. 09-P-1533 (Nov. 30, 2010), the Appeals Court of Massachusetts held that the transfer of International Data Group’s (IDG) logo licensing business to a Delaware subsidiary was a sham. The court affirmed the Appellate Tax Board’s decision and reallocated the Delaware subsidiary’s royalty income from…
