Current Corporate Income Tax Developments (Part I)

By Karen J. Boucher and Shona Ponda


  • The Supreme Court declined to review two cases in which state courts held that the physical presence requirement in Quill applies only to sales and use tax.

  • A number of states enacted legislation that prohibits a captive REIT from taking a deduction for dividends paid.

  • Maryland issued regulations that disallow a deduction from Maryland income for an NOL generated in a year when a corporation was not subject to Maryland income tax.

  • Several states passed laws or provided guidance related to deductions of intercompany intangible expenses.

During 2007, numerous state statutes were added, deleted, or modified; court cases were decided; regulations were proposed, issued, and modified; and bulletins and rulings were issued, released, and withdrawn. This two-part article focuses on some of the more interesting items in the following corporate income tax areas: nexus; Sec. 338(h)(10) transactions; allocable/apportionable income; tax base; apportionment formulas; filing methods/unitary groups; and administration. It also includes several other significant state tax developments. The first four areas are covered in Part I below; the remaining areas will be covered in Part II of this article in the April 2008 issue.



The Alabama Supreme Court denied review of a lower court decision holding that a lessor of railcars was not subject to tax where the lease agreements were executed outside of Alabama, even though some of its leased railcars were used to transport materials through Alabama and to destinations within the state.1

In another case,2 the Alabama Supreme Court denied review of a lower court decision holding that Alabama lacked jurisdiction to tax the income of a Georgia limited partner in a partnership doing business in Alabama for the tax years at issue (1998 and 2000).


The Department of Revenue (DOR) concluded that an out-of-state company that provides computerized payment processing services through independent authorized vendors nationwide was deemed to have state corporate income tax nexus with the state, even though it did not have a direct physical presence in Florida.3 In the discussion section of this ruling, the DOR noted that it is the DOR’s position that physical presence is not required to impose Florida’s corporate income tax.


Effective January 1, 2008, HB 141, Laws 2007, repealed the provision that exempts non-Idaho banks and financial institutions from the Idaho income tax by eliminating the prior “transacting business” exceptions for soliciting and acquiring loans, filing security interests, foreclosures, etc.


The DOR ruled that an out-of-state sales office subsidiary had to be included in its parent company’s consolidated return, even though it lacked in-state property and payroll, because the subsidiary engaged in the business of selling products in Indiana when it held momentary title to goods manufactured within the state by an affiliate.4 This “flash title” situation created Indiana inventory for the subsidiary for the moment that it held title to the goods.

In another finding, the DOR ruled that a retailer’s national credit card bank was subject to tax based on the statutory economic nexus standards applicable to financial institutions and denied the taxpayer’s request to abate the 10% negligence penalty.5


A Kentucky circuit court ruled that a corporate limited partner acquired nexus through the partnership, which did business within the state, because Kentucky recognizes the flowthrough nature of partnerships and, accordingly, imposes state income tax on the partners rather than on the partnership itself.6


SB 2, Laws 2007, defines “doing business” to include earning income from intangible property that has a business situs in Maryland; engaging in regular and systematic solicitation of sales in Maryland; having agents or representatives acting on the corporation’s behalf; and regularly and systematically performing services for customers located in Maryland.


The Appellate Tax Board (ATB) held that Quill’s7 physical-presence requirement does not apply to an income-based excise tax; thus the financial institution excise tax could be imposed on an out-of-state credit card bank due to its “targeted exploitation of the Massachusetts economic market and its use of the Commonwealth’s governmental infrastructure and resources” under Complete Auto’s8 substantial nexus test, even though the bank lacked physical presence in the state.9 The Supreme Judicial Court of Massachusetts (the state’s highest court) has agreed to hear the appeal of this decision.

In a case involving a trademark subsidiary, the ATB upheld the Commissioner of Revenue’s assessment, which was predicated on a finding of substantial nexus even though the trademark company had no physical presence in Massachusetts.10 The ATB also upheld the imposition of penalties, finding that the taxpayer did not demonstrate that it acted with reasonable cause in its failure to file returns or pay tax. The Supreme Judicial Court of Massachusetts has also agreed to hear the appeal of this decision.


The Michigan Supreme Court reversed a lower court and held that an out-of-state business whose sole presence in Michigan was in-state sales solicitation was subject to the state’s single business tax (SBT) for tax years prior to the release of Gillette,11 because the Gillette decision applied retroactively.12 The Gillette case held that the SBT was not an income tax and therefore was not subject to P.L. 86-272 limitations.

The new Michigan Business Tax (MBT) imposes nexus on a taxpayer that “actively solicits sales in this state and has gross receipts of $350,000 or more sourced to this state.” According to Revenue Administration Bulletin #2007-6 (12/28/07), the phrase “actively solicits” means purposeful solicitation of persons within Michigan. Solicitation means speech or conduct that explicitly or implicitly invites an order, or activities that neither explicitly nor implicitly invite an order, but are entirely ancillary to requests for an order. Solicitation is purposeful when it is directed at or intended to reach persons within Michigan or the Michigan market. Active solicitation includes, but is not limited to, solicitation through: the use of mail, telephone, and e-mail; advertising, including print, radio, internet, television, and other media; and maintenance of an internet site over or through which sales transactions occur with persons within Michigan. Examples of active solicitation include: sending mail order catalogs; sending credit applications; maintaining an internet site offering online shopping, services, or subscriptions; and soliciting through media advertising, including internet advertisements. In evaluating whether acts of solicitation are sufficient to establish “active solicitation,” the department will look to the quality, nature, and magnitude of the activity on a facts and circumstances basis.


The DOR ruled that a customer solely using an in-state company’s services of data storage, data manipulation, or data processing would not have sufficient contacts with Missouri to establish corporate income or franchise tax nexus.13 However, if the customer had employees or property within the state or used the intangible data within the state, sufficient corporate income or franchise tax nexus could be established.

In another ruling, the DOR explained that an out-of-state retailer operating internet retail websites would not be subject to state corporate income, sales/use, or franchise taxes, even though its affiliates may be performing distribution functions within the state, as long as the company’s retail and distribution functions are sufficiently separated within its corporate structure.14

New Hampshire

HB 2, Laws 2007, modified the definition of “business activity” to provide that “[b]usiness activity means a substantial economic presence evidenced by a purposeful direction of business toward the state examined in light of the frequency, quantity, and systematic nature of a business organization’s economic contacts with the state.”

New Jersey

In a case involving a trademark subsidiary, the U.S. Supreme Court denied review of the State Supreme Court decision in Lanco, Inc.,15 which held that the physical presence ruling in Quill 16 applies only to sales/use taxes and thus physical presence is not required for income tax purposes.

In another case involving a trademark subsidiary, the New Jersey Tax Court held that, in accordance with Lanco, an out-of-state intangible holding company licensing patent/trade secret intangibles to an affiliated operating company had nexus, even though it lacked an in-state physical presence.17 Of significance is the fact that the court held that the company established nexus for tax years prior to 1996, the year in which an amended department regulation added an example providing nexus for trademark affiliates. The court explained that this added regulatory example did not represent a change in policy but merely clarified and explained the existing statute enacted during 1973. The court also refused to waive related late-filing penalties, explaining that the company’s nonfiling position was “not reasonably plausible.”


The DOR proposed adding a regulation providing that a corporation may have “substantial nexus” even if it does not have physical presence in the state, based on various court decisions in other states regarding economic nexus.18


The Commonwealth Court ruled that the use of independent truckers to make deliveries through and into the state creates nexus.19


The Department of Taxation (DOT) ruled that an out-of-state internet retailer that uses various affiliated distribution centers, including one proposed distribution center in Virginia, would not have Virginia corporate income tax liability so long as its in-state activities did not go beyond the mere solicitation of orders for sales of tangible personal property.20

In a different ruling,21 the DOT ruled that an out-of-state company with a 50% limited interest in a partnership that owns commercial real estate in Virginia must file a state corporate income tax return, because the income generated by the commercial property will retain its character as Virginia source income and pass through to both the general and limited partners under state law.

In another ruling,22 the DOT found that an out-of-state limited partnership that held all its assets in a Virginia brokerage account and had all its investments held as securities traded on the major stock exchanges was not deemed to be carrying on a trade or business in Virginia and did not have income from Virginia sources.

In a subsequent ruling,23 the DOT found that an out-of-state parent and affiliate primarily engaged in providing lease guarantees did not have nexus through the activities of in-state affiliates that owned retail stores and a distribution center in Virginia, because the out-of-state companies did not have employees or property in Virginia and performed their activities, other than certain de minimis functions, outside the state.

West Virginia

The U.S. Supreme Court denied review of MBNA America, in which the West Virginia Supreme Court of Appeals held that the physical presence requirement delineated in Quill 24 is applicable only to sales and use tax and thus the imposition of business franchise tax and corporate income tax on an out-of-state bank lacking an in-state physical presence did not violate the Commerce Clause of the U.S. Constitution.25

Sec. 338(h)(10) Transactions


The DOR held that a Sec. 338(h)(10) fictional asset liquidation gain should be classified as apportionable business income because the company for which the election was made was part of the ultimate parent’s overall business and the company’s assets were business property and remained business property even when it was ultimately sold.26

In contrast, in a subsequent finding the DOR agreed that a taxpayer could treat the gain from its deemed asset sale under a Sec. 338(h)(10) election as nonbusiness income for state adjusted gross income tax purposes, with only the deemed asset gain resulting from real and tangible personal property located in Indiana as allocable to Indiana, and the deemed asset gain attributable to intangible assets as allocable to its out-of-state commercial domicile.27 According to this finding, it should not be construed to represent that the DOR would necessarily treat Sec. 338(h)(10) gains as nonbusiness income in future assessments or protests.


The Missouri Supreme Court affirmed that a Sec. 338(h)(10) gain was correctly classified as nonbusiness income allocable to a subsidiary’s out-of-state commercial domicile under both the transactional and functional tests as a one-time, extraordinary event.28

New Jersey

The New Jersey Tax Court held that the gain from a Sec. 338(h)(10) deemed asset sale was nonbusiness income allocable outside the state because the assets were deemed sold in a complete liquidation that did not occur in the regular course of the company’s business.29

In another development, the Division of Taxation adopted amendments to N.J. Admin. Code §18:7-8.12 explaining that receipts from the sale of tangible and intangible assets under a Sec. 338(h)(10) transaction are apportioned and sourced to New Jersey by multiplying the gain by a three-year average of the apportionment factors used by the target corporation for its three tax return periods immediately prior to the sale. To deviate from this apportionment method, the taxpayer must show by “clear and convincing evidence” that the methodology does not properly reflect its activity or business reasonably attributable to the state.

New York

An administrative law judge explained that the Sec. 338(h)(10) election was not available to an S corporation at the state level; thus, the nonresident individual owner’s gain from the sale of stock in a New York S corporation under a Sec. 338(h)(10) election was not subject to New York personal income tax.30


The DOR explained that Tennessee neither recognizes nor disallows the Sec. 338(h)(10) election; rather, the taxpayer must calculate its Tennessee taxable income for corporate excise tax purposes beginning with federal taxable income. Because a target company’s federal taxable income includes the gain or loss from a deemed asset sale under a Sec. 338(h)(10) election, its Tennessee taxable income will also reflect the gain or loss.31

In another development, for transactions occurring after September 30, 2007, S corporations are required to include Sec. 338(h)(10) gains or losses in computing Tennessee taxable income.32


A Utah district court held that a Sec. 338(h)(10) gain was correctly classified as nonbusiness income allocable to a subsidiary’s out-of-state commercial domicile under both the transactional and modified functional tests.33

Allocable/Apportionable Income


The DOR ruled that gains from the sale of a holding company’s subsidiary stock were apportionable business income under the state’s functional test because the acquisition, management, and disposition of the property constituted integral parts of the taxpayer’s regular trade or business operations.34

In another ruling, the DOR similarly held that gains from the sale of certain assets and property held by affiliated holding companies that were included on a taxpayer’s consolidated state corporate income tax return were deemed apportionable business income, and royalty income generated from patents held by the holding companies was also deemed apportionable business income.35


The State Tax Commission (STC) ruled that gains from the sale of stock of a subsidiary were correctly reclassified as apportionable business income for Idaho corporate income tax purposes under the state’s functional test because the parent company was unitary with the subsidiary and the parent company’s investment in the subsidiary was not merely passive but served an operational function.36

In another ruling, the STC held that the gains realized from the sale of a retailer’s out-of-state credit card/financial products business and automotive parts business constituted business income under the state’s functional test, due to the strong operational ties these businesses had with the retailer.37

Another STC ruling similarly held that gain on the sale of subsidiary stock and partnership interests, respectively, were apportionable business income under the state’s functional test because the subsidiary and its affiliates were part of the parent’s unitary business.38


The U.S. Supreme Court agreed to review MeadWestvaco,39 in which an Illinois appellate court had affirmed that an out-of-state company must treat the gain from the sale of its LexisNexis operating segment as business income under the state’s functional test. The taxpayer’s position is that LexisNexis was an independent, nonunitary subsidiary and thus under an Allied-Signal 40 analysis the income should be excluded from the tax base.

In another development, an Illinois appellate court affirmed that the gain from the liquidation sale of all U.S. retail grocery store assets by a subsidiary of a Canadian food wholesaler/distributor was nonbusiness income because the proceeds were not reinvested into the U.S. business.41

North Carolina

The DOR ruled that proceeds received from a lawsuit settlement agreement that were intended to compensate the recipient for lost profits resulting from the opposing party’s breach of contract constituted apportionable business income under both the state transactional and functional tests.42

In another decision, the DOR ruled that an out-of-state holding company investing in various partnerships that lease automobiles and other equipment was required to include its pro-rata share of an in-state limited liability company’s (LLC) apportionment data in its North Carolina corporate income tax apportionment calculation because the in-come from its investment in the LLC (which was treated as a partnership for federal purposes) constituted apportionable business income subject to the state’s corporate income tax.43


The Oregon Tax Court held that indemnification payments to members of a corporation’s board of directors were deemed expenses attributable to business income (and therefore apportionable), rather than nonbusiness expenses allocable outside the state.44


The DOT ruled that a corporation was allowed to allocate interest, dividends, and capital gains earned from its passive investment partnership to its out-of-state commercial domicile as nonbusiness income because the partnership and corporate group did not share a unitary relationship.45

State Tax Base

The majority of states imposing a corporate income-based tax begin the computation of state taxable income with taxable income as reflected on the federal corporate income tax return (Form 1120, U.S. Corporate Income Tax Return). These states use either taxable income before net operating loss (NOL) and special deductions (Line 28) or taxable income (Line 30); certain state-specific addition and subtraction modifications are then applied to arrive at the state tax base. Below is a summary of the significant changes to the states’ tax bases.

Deductions Related to Dividends


The State Tax Commission amended Rule to provide that dividends received from a real estate investment trust (REIT) or a regulated investment company (RIC) not included in the pre-apportionment tax base as a result of the federal dividends-paid deduction (DPD) are not eliminated as intercompany transactions in computing state combined income. In addition, a corporation included in a worldwide combined group for Idaho income tax purposes must treat Sec. 1248 dividends as dividends for Idaho income tax purposes. An intercompany dividend elimination is allowed to the extent dividends received are paid from current or prior year earnings previously included in income subject to apportionment.


For tax years beginning after 2008, a captive REIT is disallowed the DPD for dividends paid to a corporation. The new law also disallows a dividends-received deduction (DRD) for dividends from a REIT for tax years ending after December 30, 2008 (Ill. Comp. Stat. §5/203 (2007)).


Effective January 1, 2008, SB 500, Laws 2007, prohibits certain captive REITs from taking a deduction for dividends paid.


The Kentucky Court of Appeals af-firmed that a Nevada REIT owning real property in Kentucky was allowed DPDs for state corporate income tax purposes under federal conformity statutes that do not specifically disallow Sec. 857 deductions.46

In addition, HB 258, Laws 2007, disallows the DPD for captive REITs for tax years beginning after 2006.


The DOR provided guidance on the law enacted in 2005 that exempts dividend and interest income from corporation income tax, while allowing corporations an election to be taxed on interest income from 50% or more owned subsidiaries.47


For tax years beginning after 2006, HB 1257/SB 945, Laws 2007, generally prohibits certain captive REITs from taking a deduction for dividends paid.


The Massachusetts Court of Appeals affirmed that a corporate shareholder prohibited from claiming a DRD for amounts distributed by its REIT for federal income tax purposes was likewise barred from taking such a deduction for state corporate excise tax purposes under general federal conformity principles and legislative intent.48

•New Hampshire

The U.S. Supreme Court declined to review the New Hampshire Supreme Court’s General Electric Co. 49 decision, which held that the state’s taxing regime as a whole did not facially discriminate against foreign commerce by permitting a deduction for dividends received from foreign corporations doing business in the state but disallowing a deduction for dividends received from foreign subsidiaries not doing business in the state.

In another development, effective August 17, 2007, HB 598, Laws 2007, repealed the deduction for dividends paid by a subsidiary whose gross business profits have already been subject to taxation.

New York

For REITs and RICs owned by banks, the prior 60% deduction for dividends received from, or gains from sale or disposition of, subsidiaries is phased out over a four-year period.50 Similar changes are made to deny tax benefits to closely held REITs affiliated with insurance companies.

North Carolina

Effective for tax years beginning after 2006, HB 1473, Laws 2007, generally disallows the DPD for certain captive REITs.

Rhode Island

H 5300Aaa, Laws 2007, eliminated the DPD for captive REITs.



The DOR issued publication FYI Income 19, which explains how to compute state NOLs.


The STC ruled that because a company’s Idaho NOL deductions from prior years were not subject to the Sec. 382 deduction limitations, the NOLs should have been deducted during those prior tax years rather than carried forward and deducted during the subsequent years at issue.51


The DOR ruled that a taxpayer was allowed to entirely use an acquired corporation’s apportioned Indiana NOL carryovers for state adjusted gross income tax purposes; the losses were regulated under Sec. 382, thus separate return year limitations rules did not apply.52

In another finding, the DOR ruled that a corporation could not carry back NOLs to its previously filed separate returns because it was not considered the common parent of the consolidated group. 53


In a significant policy shift, amended Code of Maryland Regulations 03.04. 03.07 explains that an NOL generated when a corporation is not subject to Maryland income tax is disallowed as a deduction to offset Maryland income. In addition, if a liquidated or acquired corporation was not subject to Maryland income tax law when its NOL was generated, then an acquiring corporation subject to Maryland income tax cannot use the NOL of the liquidated or acquired corporation as a deduction to offset Maryland income.

New York

The New York Department of Taxation and Finance explained that in determining the New York State NOL deduction for a group of corporations filing an Article 9-A state combined franchise tax report, the Sec. 382 provisions and the separate return limitation year (SRLY) overlap provisions of Regs. Sec. 1.1502-21(g) are to be applied.54 Therefore, if for federal income tax purposes the SRLY overlap rule does not apply to the New York NOL for a tax year because the Sec. 382 provisions apply, Sec. 382 provisions would apply under Article 9-A for the tax year.

In another issue related to NOLs, the Tax Appeals Tribunal held that an Article 9-A corporation could not use the losses of its subsidiary on which it had elected to reattribute the losses on a prior-year consolidated federal income tax return because corporations filing separate New York returns must recompute their federal taxable income and their NOL deductions on a separate-return basis.55


The DOR explained that a parent corporation filing a federal consolidated income tax return and a separate Tennessee return generally cannot use a NOL carryforward of an affiliate that (1) dissolves; (2) merges into the parent; (3) converts from a corporation to a single-member LLC wholly owned by the parent; or (4) undergoes an F reorganization.56


In the September 2007 Tax Policy News, the comptroller explained that recent changes to the state’s franchise tax law allow a taxable entity to take a temporary credit for business loss carryforwards against its franchise tax due on net taxable margin. A taxable entity is eligible for the credit if on May 1, 2006, the entity was subject to the franchise tax.


The Vermont Department of Taxes explained the treatment of NOLs under legislation passed in 2005. For losses occurring in tax years beginning January 1, 2007, the law creates a Vermont NOL that is available as a carryforward for 10 years and establishes a transition rule for loss years 2007, 2008, and 2009 when a portion of the taxpayer’s federal net operating loss is carried back.57


The DOT explained that to the extent that NOLs are carried over as a result of a liquidation made under Sec. 332 or through a corporate reorganization made through Sec. 368(a) and are allowable for federal income tax purposes, they would be allowable for Virginia corporate income tax purposes.58

Intercompany Expenses


An Alabama circuit court held that the intercompany intangible expense add-back statute was “unreasonable” as applied to payments made to related Delaware intangible/trademark holding companies that had both business purpose and economic substance.59 The DOR has appealed this decision.


The DOR proposed Rule 560-7-3-.05, providing guidance on the administration and implementation of the addback of related-party intangible expenses and interest related to intangibles.


For tax years ending after December 30, 2008, SB 1544, Laws 2007, disallows interest, intangible expenses, and insurance premiums paid to a foreign entity that would be a member of the same unitary business but for the fact that it is prohibited from being in the unitary business group because it is required to apportion its income under a different method.


The Massachusetts ATB denied royalty and interest (on loans from the intangible holding companies back to the retailer) to a retailer that had transferred trademarks and service marks to several related intangible holding companies because the ATB deemed the trademark transfer and license-back arrangement to be a “sham transaction” and that the associated intercompany loans were not “bona fide debt.”60

In Directive 07-9, the DOR explains the requirement that amounts deducted for the amortization of intangible assets based on Sec. 197 are among the intangible expenses that are added back to a corporation’s taxable net income under the state’s affiliate addback requirements to calculate state excise tax liability.

Rhode Island

H 5300Aaa, Laws 2007, disallows intercompany intangible expenses and related interest for tax years beginning after 2007 and requires that taxpayers report the amount of the adjustments for the 2007 tax year had the law been applicable in 2007.


The DOT ruled that a company was limited in claiming an addback exception to only that portion of the royalties paid to the affiliates that corresponded to the portion of each affiliate’s income subject to tax in the other states. The company unsuccessfully argued that it should be able to claim the addback exception for all royalty amounts paid to these three affiliates, as the affiliates were “subject to tax” based on or measured by net income imposed by other states.61

Other Modifications


The Franchise Tax Board (FTB) explained that while California has not conformed to amendments to the

Sec. 355(b) “active trade or business requirement” made by Section 202 of the Tax Increase Prevention and Reconciliation Act of 2005, P.L. 109-222, with respect to tax-free treatment of a corporate reorganization, the taxpayer at issue satisfied the requirement for its reorganization to be treated as tax free for California franchise tax purposes due to a liquidation of one of its subsidiaries.62


On November 5, 2007, the U.S. Su-preme Court heard oral arguments in Department of Revenue v. Davis,63 in which the Kentucky Court of Appeals held that the state’s statutory bond taxation scheme (under which the income from sister states’ bonds is taxed while exempting the interest on Kentucky bonds) was facially unconstitutional in violation of the U.S. Commerce Clause.


HB 1585, Laws 2007, conforms Mississippi’s treatment of like-kind exchanges and involuntary conversions to the federal treatment.

New Hampshire

Effective August 17, 2007, HB 598, Laws 2007, repealed the deductions for distributions from a joint venture or partnership that have already been subject to taxation. It also repealed the corporate deduction of a distribution to a parent company by a domestic international sales corporation where the profits from which the distribution is made have already been subject to taxation.

New York

The New York Tax Appeals Tribunal held that for Article 9-A purposes, the loss on a sale of a subsidiary was attributable to a reduction in business capital, rather than subsidiary capital from an investment in a subsidiary included in the combined group.64

For more information about this article, contact Ms. Boucher at


Authors’ note: This article is written in general terms and is not intended to be a substitute for specific advice regarding tax, legal, accounting, investment planning, or other matters. While all reasonable care has been taken in the preparation of this outline, Deloitte Tax LLP accepts no responsibility for any errors it may contain, whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person or entity that relies on it.

1 State Dept. of Rev. v. Union Tank Car Co., 2007 Ala. Civ. App. LEXIS 246 (Ala. Civ. App. 2007), petition for review denied (Ala. 6/15/07).

2 Lanzi v. Alabama Dept. of Rev., 968 So2d 18 (Ala. Civ. App. 2006), petition for review denied (Ala. 4/13/07).

3 Technical Assistance Advisement #07C1-007 (10/17/07) .

4 IN DOR, Ltr. of Finding No. 03-0487 (1/24/07).

5 IN DOR, Ltr. of Finding No. 06-0394 (5/22/07). Note that the DOR does not rule on the constitutionality of a statute; that issue is to be addressed by the Indiana Tax Court.

6 Kentucky Rev. Cabinet v. Asworth Corp., Civil Action No. 06-CI-00288 (Ky. Cir. Ct., Franklin, 12/4/07).

7 Quill Corp. v. North Dakota Tax Comm’r, 504 US 298 (1992).

8 Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977).

9 Capital One Bank and Capital One F.S.B. v. Commissioner of Rev., Dkt. Nos. C262391 & C262598 (Mass. App. Tax Bd. 6/22/07).

10 Geoffrey, Inc. v. Commissioner of Rev., Dkt. No. C271816 (Mass. App. Tax Bd. 7/24/07).

11 Gillette Co. v. Michigan Dep’t of Treas., 497 NW2d 595 (Mich. Ct. App. 1993).

12 International Home Foods, Inc. v. Department of Treas., 728 NW2d 862 (Mich. 2007).

13 MO DOR, Ltr. Ruling No. LR 3819 (4/11/07).

14 MO DOR, Ltr. Ruling No. LR 3885 (5/17/07).

15 Lanco, Inc. v. Director, Div. of Tax’n, 908 A2d 176 (N.J. 2006), cert. denied, S. Ct. Dkt. 06-1236 (U.S. 6/18/07).

16 Quill Corp. v. North Dakota Tax Comm’r, 504 US 298 (1992).

17 Praxair Tech., Inc. v. Director, Div. of Tax’n, No. 007445-05 (N.J. Tax Ct. 6/18/07).

18 Proposed OAR 150-317.010.

19 Cruise Intermodal Corp. v. Pennsylvania, Dkt. No. 667 FR 2004 (Pa. Commw. Ct. 2007).

20 VA Pub. Doc. No. 07-24 (3/27/07).

21 VA Pub. Doc. No. 07-50 (4/26/07).

22 VA Pub. Doc. No. 07-77 (5/18/07).

23 VA Pub. Doc. No. 07-116 (7/19/07).

24 Quill Corp. v. North Dakota Tax Comm’r, 504 US 298 (1992).

25 Tax Comm’r of W. Va. v. MBNA America Bank, 640 SE2d 226 (W. Va. 2006), cert. denied sub nom., FIA Card Services, N.A. v. West Virginia Tax Comm’r, S. Ct. Dkt. 06-1228 (U.S. 6/18/07).

26 IN DOR, Ltr. of Finding No. 06-0187 (2/20/07).

27 IN DOR, Ltrs. of Finding Nos. 07-0121, 07-0122 (9/10/07).

28 ABB C-E Nuclear Power, Inc. v. Director of Rev., 215 SW3d 85 (Mo. 2007).

29 McKesson Water Prods. Co. v. Director, Div. of Tax’n, No. 000156-2004 (N.J. Tax Ct. 8/13/07).

30 In re Baum, DTA 820837 and 820838 (12/20/07).

31 TN DOR, Revenue Review (January 2007): 3.

32 2007 Tenn. ALS 602; 2007 Tenn. Pub. Acts 602; 2007 Tenn. Pub. Acts Ch. 602; 2007 Tenn. SB 2223.

33 Chambers v. Utah State Tax Comm’n, No. 050402915 TX (Utah Dist. Ct., Utah Co., 1/25/07).

34 AZ DOR, Hearing Officer Decision No. 200600091-C (5/14/07).

35 AZ DOR, Hearing Officer Decision No. 200600082-C (6/15/07).

36 ID State Tax Comm’n Ruling No. 19109 (2/14/07).

37 ID State Tax Comm’n Ruling Nos. 18719 and 19549 (4/20/07).

38 ID State Tax Comm’n Ruling No. 19311 (7/30/07).

39 Mead Corp. v. Department of Rev., 861 NE2d 1131 (Ill. App. Ct. 2007), rev. denied, 862 NE2d 235 (Ill. 2007), cert. granted sub nom., MeadWestvaco Corp. v. Department of Rev., S. Ct. Dkt. 06-1413 (U.S. 9/25/07).

40 Allied-Signal, Inc. v. Director, Div. of Tax’n, 504 US 768 (1992).

41 National Holdings, Inc. v. Zehnder, 874 NE2d 91 (Ill. App. Ct. 2007).

42 NC DOR, Secretary of Revenue Decision No. 2006-111 (4/19/07).

43 NC DOR, Secretary of Revenue Decision No. 2007-28 (9/14/07).

44 U-Haul Co. of Or. v. Department of Rev., TC-MD 030994B (Or. T.C. 8/29/07).

45 VA Pub. Doc. No. 07-197 (11/30/07).

46 Kentucky v. Autozone Dev. Corp., No. 2006-CA-002175-MR, 2007 Ky. App. LEXIS 401 (Ky. Ct. App. 10/12/07).

47 LA DOR, Revenue Information Bulletin No. 07-010 (3/23/07).

48 BankBoston Corp. v. Commissioner, 861 NE2d 450 (Mass. App. Ct. 2007).

49 General Electric Co., Inc. v. Commissioner,914 A2d 246 (N.H. 2006), cert. denied, S. Ct. Dkt. 06-1210 (U.S. 10/29/07).

50 N.Y. Tax Law §§1453(e)(11)(ii) and (iii) and 1453(u)(3), added by New York State 2007–2008 Budget (S 2110-C, Laws 2007).

51 ID State Tax Comm’n Ruling No. 19151 (1/23/07).

52 IN DOR, Ltr. of Finding No. 06-0130 (1/3/07).

53 IN DOR, Ltr. Of Finding No. 06-0441 (12/5/07).

54 NYS Dep’t of Tax’n and Fin., TSB-A-07(2)C [Deloitte Tax LLP] (3/19/07).

55 In re Univisa, Inc., DTA No. 820289 (N.Y. Tax App. Tribunal 9/20/07).

56 TN DOR, Rev. Rul. No. 07-14 (5/3/07).

57 VT Dep’t of Taxes, Technical Bulletin TB-35 (3/13/07).

58 VA Pub. Doc. No. 07-120 (7/31/07).

59 VFJ Ventures, Inc. v. Surtees, No. CV-03-3172 (Ala. Cir. Ct., Montgomery Cty. 1/24/07).

60 TJX Cos., Inc. v. Commissioner, Dkt. No. C262229-31 (Mass. App. Tax Bd. 8/15/07).

61VA Pub. Doc. No. 07-217 (12/20/07).

62 CA FTB Chief Counsel Ruling No. 2007-3 (7/17/07).

63 Davis v. Department, 197 SW3d 557 (Ky. Ct. App. 2006), cert. granted sub nom., Department of Rev. of Ky. v. Davis, S. Ct. Dkt. 06-666 (U.S. 5/21/07). The Kentucky Supreme Court denied review of this case.

64 In re Bausch & Lomb, Inc., DTA 819883 (12/20/07).

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