Shaking things up in state and local tax
Shaking things up in state and local tax
By Kathryn Pittman and Timothy Gustafson
The Virginia Tax Commissioner ruled a taxpayer’s licensing arrangements with a subsidiary intangible holding company (IHC) did not meet the unrelated party exception to Virginia’s intangible expense add-back statute. The taxpayer, a national operator and franchisor of fast food restaurants, created the IHC to hold its intangible property…
By Todd Betor and Timothy Gustafson
The Virginia Tax Commissioner ruled that the state’s intangible expense add-back exception is not all inclusive and does not apply to the gross amount of royalty payments made to a taxpayer’s affiliate based solely on the gross amount of the payments shown on another state’s tax return. The taxpayer…
By David Pope and Timothy Gustafson
The New Jersey Tax Court drafted a letter to the Superior Court of New Jersey, Appellate Division, to amplify the Tax Court’s August 9, 2013, taxpayer-favorable decision applying New Jersey’s “Throw-Out Rule” in Lorillard Licensing Co. LLC v. Division of Taxation, Docket No. A-2033-13T1. In Lorillard, the…
By David Pope and Andrew Appleby
The Indiana Department of Revenue determined that storage of advertising catalogs in Indiana, for a taxpayer’s out-of-state clients, did not create corporate income tax nexus for such clients. The taxpayer, located in Indiana, stored and distributed catalogs for its clients. Indiana does not define “doing business” statutorily, but the…
By Madison Barnett and Jonathan Feldman
A Texas trial court denied a taxpayer’s claim that it was entitled to use the Multistate Tax Compact’s three-factor formula election for the Texas Margin Tax. The court’s order did not specifically address either the availability of the election or whether the tax meets the MTC’s definition of an…
By Zachary Atkins and Prentiss Willson
The Oregon Supreme Court held that the state’s sales factor exclusion for gross receipts from intangible assets not derived from a taxpayer’s primary business activity applies to all types of intangible assets. The taxpayer, Tektronix, sold its printer division to Xerox for approximately $925 million, of which almost $600…
By Christopher Chang and Andrew Appleby
The Arizona Court of Appeals upheld a broad definition of business income, adopting both the transactional and functional tests. The Court of Appeals stated that business income includes both income arising from transactions in a taxpayer’s regular course of business (the “transactional test”) and income from the acquisition, management,…
By Kathryn Pittman and Andrew Appleby
The Colorado Department of Revenue determined that sales of digital images, whether delivered electronically or via tangible medium, are sales of tangible personal property for income tax apportionment purposes. The taxpayer was engaged in the business of providing digital images to commercial and government customers and provided such images…
By Maria Todorova and Timothy Gustafson
The Mississippi Supreme Court denied the taxpayer’s motion for rehearing in Equifax, Inc. v. Mississippi Dep’t of Revenue, a case on which we previously reported. The denial leaves undisturbed its June holding, reversing the Mississippi Court of Appeals’ decision, which held the taxpayer bears the burden of…
By Scott Booth and Timothy Gustafson
The Arizona Department of Revenue concluded in a Taxpayer Information Ruling that court-ordered proceeds from a patent infringement lawsuit were properly characterized as business income. The taxpayer held more than 200 patents that it developed or acquired for use in its own manufacturing process or patent licensing activities, one…
