intangibles

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California’s Fourth Appellate District ruled that taxpayers must include the value of intangible emissions reduction credits (ERCs) when they determine the fair market value of an independent power plant’s property. Elk Hills Power, LLC v. Bd. of Equalization, No. D056943 (May 10, 2011). Elk Hills sets a disturbing precedent regarding the taxation of intangibles…

The Texas Comptroller of Public Accounts (Comptroller) took a “members only” approach to determine how revenue derived from website access fees should be sourced to Texas for Texas Franchise Tax apportionment purposes. In Letter No. 201102989L (Feb. 2, 2011), the Comptroller considered the sourcing of revenues derived from a company’s social networking website. The social networking website allowed registered users to pay a flat fee to access the website’s database, publish information, communicate with other users, and utilize and interact with the website’s programs. The Comptroller concluded that such fees were akin to membership fees because customers were charged a flat rate for certain benefits and thus should be sourced to the location of the payor.Continue Reading Texas “Tweets” Guidance on Sourcing Social Networking Website Revenue

The California Court of Appeal held that receipts from Nortel’s license of computer programs used to operate a telephone company’s switch hardware were not subject to sales tax. Nortel Networks, Inc. v. State Board of Equalization, Case No. B213415 (2d App. Dist. Jan. 18, 2011). The court also partially invalidated Regulation 1507 on the grounds that the State Board of Equalization (SBE) had exceeded its authority when it enacted the regulation.

The Court of Appeal’s decision provides guidance regarding the scope of exempt Technology Transfer Agreements (TTA), which are defined as “any agreement under which a person who holds a patent or copyright interest assigns or licenses to another person the right to make and sell a product or to use a process that is subject to the patent or copyright.” Cal. Rev. & Tax. Code § 6011(c)(10)(D); 6012(c)(10)(D).Continue Reading California Court of Appeal Switcheroo: Software Constitutes Technology Transfer Agreement

The Multistate Tax Commission (MTC) held its Fall Uniformity Committee Meetings in Atlanta, Georgia on December 7-9. With a significant turnover in state tax commissioners expected as a result of the November elections, it will be interesting to see if any of the decisions made by MTC representatives the last few years are revisited at…

The South Carolina Tax Realignment Commission (TRAC) has released its Final Report, which includes proposed draft legislation to achieve its recommendations. As expected, the recommendations include the expansion of the sales tax base to include “data processing, software delivered over the Internet, and digital products.” In addition, the recommendations include language to expand sales tax…

Chaos resulting from the California budget crisis reached a crescendo in recent weeks because of a new budget agreement, a bevy of voter referendums addressing tax legislation, and new regulations addressing corporate income tax apportionment issues. In the aftermath of the chaos, California has again significantly modified its corporate income tax apportionment provisions, for…