Shaking things up in state and local tax
Shaking things up in state and local tax
By Zachary Atkins and Timothy Gustafson
The Indiana Department of State Revenue issued two letters of findings in which it concluded that a multistate corporation and its subsidiary were not entitled to source their receipts from franchise agreements based on costs of performance (COP) for corporate income tax purposes. The parent corporation entered into franchise…
By Madison Barnett and Timothy Gustafson
The Michigan Court of Appeals held that a provider of event planning and coordination services presented sufficient evidence to support its costs of performance sales factor sourcing method, under which it sourced services receipts to the location where the event occurred. Over the Department’s arguments that the taxpayer failed…
By Sahang-Hee Hahn and Andrew Appleby
The California Franchise Tax Board amended its regulation governing the sourcing of sales of tangible personal property to reflect California’s statutory shift in 2009 to the Finnigan rule, effective for tax years beginning on or after January 1, 2011. As amended, the regulation assigns receipts from sales of tangible…
By Nicole Boutros and Timothy Gustafson
The New York State Department of Taxation and Finance issued an advisory opinion determining that a securities broker may source receipts from “matched principal transactions” based on the “production credit method” provided in New York tax law. The taxpayer was a U.S. entity operating in six states, including New…
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…
