Current Corporate Income Tax Developments (Part I)

EXECUTIVE SUMMARY

During 2008, there were many changes in the area of state and local corporate income taxation. 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were decided; regulations were proposed, issued, and modified; and bulletins and rulings were issued, released, and withdrawn.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, tax base, allocable/apportionable income, apportionment formulas, filing methods/unitary groups, and administration. The article also includes several other significant state tax developments. Part I, below, covers the first three areas; the remaining topics will be reviewed in Part II in the April 2009 issue.

 

Nexus

Arizona

The Department of Revenue (DOR) held that an out-of-state franchisor that received license and royalty fees from franchisees located within Arizona had sufficient nexus with Arizona for state corporate income tax purposes. ¹ Citing economic nexus cases from other jurisdictions, the DOR agreed that the physical presence test articulated in Quill ² is limited to sales and use tax cases.

Idaho

Effective January 1, 2008, HB 141, Laws 2007, repealed the provision that exempts non-Idaho banks and financial institutions from the Idaho income tax by eliminating the prior “transacting business” exceptions for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

Indiana

The Indiana Tax Court held that economic presence is sufficient to satisfy the substantial nexus requirement. Thus, the Commerce Clause does not require physical presence to subject an organization to the Indiana Financial Institutions Tax. ³

Iowa

The Administrative Hearings Division ruled that an out-of-state company that owned all the intellectual property of Kentucky Fried Chicken, including the related trademarks and trade names as well as all other aspects of preparing and marketing the food products, and that licensed this intellectual property to nonaffiliated restaurant franchisees nationwide, had corporate income tax nexus with Iowa even though it lacked an in-state physical presence. ⁴

Louisiana

From the financial reporting perspective, companies publicly traded in the United States must follow the will of the Securities and Exchange Commission (SEC), which has delegated standardsetting authority to the Financial Accounting Standards Board (FASB) in determining GAAP. However, there is a strong movement toward international convergence of accounting standards— that is, to bring GAAP under one set of international standards (iGAAP).

The Louisiana Court of Appeal affirmed that the state corporate income/ franchise tax could be imposed on royalties earned by an out-of-state trademark subsidiary under a licensing agreement that based the royalties on its parent retailer’s sales, even though the trademark company lacked an in-state physical presence. ⁵

Maine

In its February 2008 Tax Alert, Maine Revenue Services (MRS) announced that it believes economic nexus alone subjects an entity to Maine tax and “[a]ll open periods may be subject to review.” ⁶

Maryland

A Maryland circuit court affirmed the Maryland Tax Court’s decision, which held that an out-of-state royalty company that licensed various trademarks/ intangibles to its parent company retailer lacked real economic substance as a separate business entity and was liable for Maryland corporate income tax. ⁷ The court held that its activities should be viewed through the substantial in-state activities of its operating parent, imparting nexus in Maryland on the royalty company for state corporate income tax purposes.

In a similar decision, the Maryland Tax Court held that two out-of-state trademark subsidiaries of a parent retailer that did business in Maryland were liable for Maryland corporate income tax because they lacked real economic substance as separate business entities. ⁸ Following the The Classics Chicago, Inc. decision, the court found that the companies’ activities should be viewed through the substantial in-state activities of their operating parent, which imparted the requisite nexus in Maryland for state corporate income tax purposes.

Michigan

Revenue Administrative Bulletin (RAB) 2008-4 (10/21/08) explains that nexus is established if a taxpayer (1) has a physical presence in the state for more than one day during the tax year or (2) actively solicits sales in Michigan and has at least $350,000 of Michigan-sourced gross receipts.

The RAB also explains that persons whose activities are limited to those protected by P.L. 86-272 are not subject to the business income tax portion of the Michigan Business Tax (MBT); however, persons otherwise having sufficient nexus are still subject to the modified gross receipts tax portion of the MBT. The RAB provides numerous examples illustrating the nexus standards.

Missouri

In a letter ruling, the DOR ruled that an out-of-state insurance company that solely generated Medicare Part D premiums (which are exempt from Missouri’s gross premiums tax) was subject to Missouri’s corporation income tax because merely being “subject to” the state gross premiums tax does not relieve a taxpayer of its Missouri corporation income tax liability. ⁹

New Hampshire

An out-of-state company that sold products and performed recruiting functions within the state through district managers was deemed subject to the state business profits tax because the managers were considered the company’s employees rather than independent contractors. ¹⁰ The managers did not satisfy the state administrative rule’s requirements for classification as independent contractors, even though they had been granted independent contractor status as direct sellers for federal income tax purposes, because they did not work for more than one principal.

New Jersey

The New Jersey Superior Court, Appellate Division, reversed and remanded the New Jersey Tax Court’s earlier decision and held that the economic nexus rule established in Lanco ¹¹ does not apply for tax years prior to 1996, the year in which an amended department regulation added an example providing that a royalty- earning intangible holding company had income tax nexus by earning trademark royalties related to sales of products by an affiliate in New Jersey. ¹²

New York

For tax years beginning after 2007, a credit card issuer that has any of the following is subject to tax: (1) credit cards issued to 1,000 or more customers with New York mailing addresses; (2) merchant customer contracts and the total number of New York locations covered by those contracts equals 1,000 or more; (3) a combined number of New York customers and New York merchant locations that equals 1,000 or more; or (4) combined receipts of $1 million or more from New York cardholders and merchant customer contracts related to New York merchant locations. ¹³

Oregon

The DOR adopted regulation OAR 150-317.010, which “clarifies” that a corporation may have substantial nexus with Oregon without having a physical presence. The regulation also provides that substantial nexus exists where a taxpayer regularly takes advantage of Oregon’s economy to produce income and that nexus may be established through the significant economic presence of the taxpayer in the state.

South Carolina

The DOR issued a revenue ruling ¹⁴ addressing “some of the common questions that have arisen relating to taxpayers concerned about the implications of Geoffrey.” ¹⁵ The ruling clarifies a previously issued revenue ruling (SC Rev. Rul. No. 98-3) and provides examples that show activities or relationships that will not, by themselves, create income tax nexus with South Carolina.

Virginia

An in-state producer/seller of tangible personal property with two out-of-state subsidiaries that operated as accounts receivable factoring companies created state corporate income tax nexus for one of the subsidiaries by having its in-state employees service receivables in Virginia on the subsidiary’s behalf. ¹⁶ Such servicing activities included the review of existing customers’ credit worthiness and the discussion of delinquent accounts. These activities exceeded the protections provided by P.L. 86-272 and were conducted by the parent on behalf of its indirectly owned subsidiary. However, even though the outof- state subsidiary may have established nexus with Virginia, the provided facts raised the question of whether it had any income sourced to Virginia under the state’s apportionment provisions.

West Virginia

Legislation enacted during 2008 reinstated the economic nexus standard for financial organizations that otherwise would have been repealed after 2008. ¹⁷

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. Following is a summary of the significant changes to the rules regarding states’ tax bases.

Deductions Related to Dividends

Alabama

HB 62, Laws 2008, disallows the dividends- paid deduction (DPD) for captive real estate investment trusts (REITs) and limits the dividends-received deduction (DRD) for corporate owners to the deduction that would have been permitted under Sec. 243 if received from an entity that was not a REIT.

Illinois

Legislation passed in 2007 disallowed the DPD for captive REITs for tax years beginning after 2008. HB 5069, Laws 2008, provides that the director of the DOR may not make an adjustment under 35 ILCS 5/404 to base income that would have the same effect as retroactively applying this and other 2007 law changes.

Massachusetts

In a case involving two REITs that received interest income from real estate loans transferred to them by two parent banks and that paid out the interest income in the form of dividends to two Rhode Island passive investment companies, which in turn paid dividends to the parent banks, the Appellate Tax Board (ATB) ruled that the contested transactions were instituted for the sole purpose of avoiding Massachusetts tax. ¹⁸ Because the transactions lacked economic substance and business purpose, the ATB ruled that the transactions were a sham and upheld the state revenue commissioner’s disallowance of the REITs’ DPDs. In addition, because the REITs failed to establish that they were taxable in another state, their income was not apportionable among the various states in which real estate securing the loans was located.

Tennessee

For tax years ending after June 30, 2008, financial institutions must disclose dividends directly or indirectly received from captive REITs. ¹⁹

Utah

HB 359, Laws 2008, prohibits certain captive REITs from taking a DPD for tax years beginning on or after January 1, 2008.

West Virginia

HB 4420, Laws 2008, prohibits certain captive REITs and regulated investment companies (RICs) from taking a DPD. The law provides some exceptions, such as allowing a DPD taken by publicly traded REITs or by qualified REITs and RICs.

NOLs

California

SB 28, Laws 2008, suspends NOL deductions for tax years beginning after 2007 and before 2010, extends the NOL carryover period to 20 years from 10 years for NOLs attributable to tax years beginning after 2007, and allows a two-year carryback of NOLs attributable to tax years beginning after 2010.

Florida

A Florida district court of appeal affirmed the Department of Revenue’s ruling that Florida’s limitation of NOL carryovers to federal net losses under Sec. 172 does not invalidly discriminate against foreign corporate dividends and is therefore not unconstitutional. ²⁰ The taxpayer unsuccessfully argued that because losses created by domestic dividend deductions can always be carried over while the foreign tax credit, calculated through the payment of foreign dividends, cannot, the law results in invalid discrimination between domestic and foreign dividends. The court explained that the taxpayer had an option under federal law to take a deduction based on the foreign taxes paid by its subsidiaries (and possibly a deduction based on foreign dividends received) but chose instead to take the credit based on taxes paid by those subsidiaries that paid it dividends.

In another development, a Florida district court of appeal reversed a lower court decision and held that the Florida separate return limitation year (SRLY) administrative rule, which prohibited the federal consolidated group from deducting NOLs sustained in prior tax years, is “an invalid exercise of delegated legislative authority” because it “enlarges, modifies, or contravenes the specific provisions of law implemented” in violation of Florida statutes. ²¹ As a result of this decision, the DOR removed the Florida SRLY provisions from Fla. Admin Code rule 12C-1.013.

Illinois

The DOR issued a revised rule that explains amendments under legislation enacted in 2007 (P.A. 95-0233), mandating that taxpayers that are required to reduce their federal NOL or NOL carryover by the amount of any discharge of indebtedness income excluded from taxation because the taxpayer is insolvent or in bankruptcy make a corresponding reduction in any Illinois net loss or net loss carryover. ²²

Maine

Corporations with a recapture subtraction modification of a previously denied NOL carryback are limited to claiming no more than $100,000 of the modification for any tax year beginning in 2008. ²³

In another development, Ch. 700 (LD 2305), Laws 2008, provides that for tax years beginning in 2008, corporate income taxpayers must add back to their tax base 10% of the absolute value in excess of $100,000 of any NOL that is being carried over to the tax year under Sec. 172 for federal income tax purposes. In December, MRS updated its NOL guidance to include computation carryover and recapture examples in tax year 2008 and subsequent years. ²⁴

New Jersey

For losses generated in periods ending after June 30, 2009, S 2130, Laws 2008, increases the NOL carryover period from 7 to 20 years.

Vermont

The Department of Taxes set forth the method to convert pre-2007 federal NOLs to Vermont NOLs. ²⁵ For years beginning after 2006, Vermont no longer piggybacks onto the federal NOL calculation. Instead, a Vermont NOL is defined as “any negative income after allocation and apportionment of Vermont net income” and can be carried forward to offset Vermont income for up to 10 years, but it cannot be carried back.

West Virginia

Among other provisions, SB 680, Laws 2008, provides that taxpayers who filed a consolidated tax return for the 2008 tax year are allowed to allocate unused NOLs and tax credits earned prior to 2009 among members of the unitary group (i.e., no SRLY-type limitations would apply).

Intercompany Expenses

Alabama

HB 62, Laws 2008, amends the corporate income tax intangible/interest expense add-back statute by clarifying that the subject-to-tax exception applies only on a post-apportionment basis. In addition, the portion of an income item that is attributed to another taxing jurisdiction having a tax on net income is considered subject to tax even if no actual taxes were paid on the item in that taxing jurisdiction by reason of deductions or otherwise. The law limits retroactivity on these changes to tax years beginning after 2006 and requires the waiver of any penalty involving underestimated income tax, late filing of a tax return, or late payment of income tax resulting from this new law.

In another development, the Alabama Supreme Court affirmed an Alabama Court of Civil Appeals decision, which held that the taxpayer presented no compelling reason to deviate from the department’s limited interpretation of the state intangible expense addback statute’s unreasonable exception and that application of the statute in that case did not distort the manufacturer’s income. ²⁶ Specifically, the court held that the Court of Civil Appeals decision was a thorough and well-reasoned opinion that it adopted “in its entirety.”

The Alabama Court of Civil Appeals had also reasoned that the manufacturer had sufficient nexus with Alabama to justify tax imposition and that the addback statute resulted in taxation of income fairly attributable to Alabama and was not externally inconsistent. Therefore, the addback statute did not violate the Commerce or Due Process Clauses of the U.S. Constitution. The taxpayer has filed a petition with the U.S. Supreme Court to review this decision.

Indiana

An Indiana company that prepared and printed financial/business documents was allowed to deduct royalty expenses paid to an out-of-state affiliate for state adjusted gross income tax purposes because its intercompany arrangement and associated payments did not constitute an abusive tax avoidance scheme or unfairly reflect the company’s Indiana source income. ²⁷

Similarly, a restaurateur successfully showed that royalty, marketing, and management fee payments made by it and its three operating restaurant subsidiaries to an out-of-state wholly owned management subsidiary that held the various trade, service, and other proprietary marks associated with the parent company’s restaurant business were valid business expense deductions that need not be disallowed. ²⁸

In another DOR ruling, an in-state shopping center development company was eligible to claim business expense deductions for license and management fees paid to its foreign parent company because the audit report failed to explain how the company’s filing method did not fairly reflect its Indiana income. ²⁹

Minnesota

For tax years beginning after 2007, HF 3149, Laws 2008, amends the definition of a “foreign operating corporation” for purposes of the state corporation franchise tax, requiring that at least 80% of the corporation’s gross income from all sources be “active foreign business income.” The new law also requires five related addbacks to taxable corporate income, including (1) interest and intangible expenses, losses, and costs paid, accrued, or incurred by any member of the unitary group to or on behalf of a member that is a foreign operating corporation; (2) interest income and income generated from intangible property received or accrued by a foreign operating corporation that is a member of the taxpayer’s unitary group; (3) dividends attributable to the income of a foreign operating corporation group member that equal the dividends-paid deduction of a REIT to the foreign operating corporation; (4) income of a foreign operating corporation group member that equals the gains derived from the sale of real or personal property located in the United States; and (5) the federal deduction for 80% of royalties or similar income derived from a foreign operating corporation if the income resulting from the payments would be income from sources within the United States, as defined under the Code.

Ohio

The Ohio Board of Tax Appeals held that the taxpayer was ineligible for refunds from the “subject to tax” exception under Ohio’s related-member intangible/interest expense addback requirement because the licensing fees at issue were paid to a related member that was subject to corporate income tax in two states (Massachusetts and South Carolina), where taxpayers are afforded the opportunity to file consolidated or combined returns. ³⁰ Under the state’s “subject to tax in other states” addback exception, “other states” do not include those states with laws allowing the taxpayer and a related member to file a combined or consolidated income tax return that could result in the elimination of the intercompany transactions at issue.

In addition, the board explained that the existence of an affiliated marketing company to receive payment for licensing fees from the taxpayer was a “tax avoidance scheme” that allowed the retailer to remove the licensing fees from its state net income and permitted them to escape taxation. The taxpayer unsuccessfully argued that although Massachusetts and South Carolina offer the opportunity to file consolidated or combined returns, the nomenclature should be ignored because neither state actually eliminates the effects of the related member transactions at issue.

Oklahoma

Effective January 1, 2008, SB 2034, Laws 2008, requires taxpayers to add back to their federal taxable income otherwise deductible rents and interest expenses paid to captive REITs.

Oregon

The Oregon Tax Court held that because a parent’s initial transfer of trademark intellectual property to an insurance subsidiary must be disregarded as a sham transaction lacking economic substance, the parent could not claim subsequent royalty expense deductions for using the property because it effectively owned the property for income tax purposes. ³¹

Wisconsin

For tax years beginning after 2007, intercompany interest and rental expense deductions are disallowed unless one of several exceptions is met. ³²

Deductibility of Texas Margin Tax

Kansas, Massachusetts, New Jersey, and Wisconsin have ruled that the Texas Margin Tax is not deductible and thus must be added back for corporate tax purposes. ³³ In contrast, Minnesota, Pennsylvania, and Virginia have ruled that the Texas Margin Tax is not based on net income and thus is not required to be added back for corporate tax purposes. ³⁴

Other Modifications

Florida

DOR emergency rule 12CER08-31: (1) a llows Florida taxpayers to depreciate assets under the federal depreciation provisions in effect on January 1, 2007, if federal bonus depreciation is elected for those assets; (2) allows Florida taxpayers to deduct, in years after 2008, the difference between the depreciation that would have been allowable under the federal depreciation provisions in effect on January 1, 2007, and the amount of depreciation expense deducted on the federal return for assets on which 2008 federal bonus depreciation was elected; (3) establishes a similar recapture mechanism for disallowed 2008 additional Sec. 179 expense; and (4) provides for basis adjustments to account for differences between federal and Florida depreciation and expensing.

Georgia

For tax years beginning after 2007, HB 1151, Laws 2008, eliminates the requirement that in determining the disallowed interest expenses related to tax-exempt U.S. obligation interest, the direct and indirect income expenses must be determined by multiplying the total interest expense by a fraction, the numerator of which is the taxpayer’s average adjusted bases of such U.S. obligations and the denominator of which is the average adjusted bases for all the taxpayer’s assets.

In another development, a superior court held that a taxpayer treated as a C corporation for Georgia income tax purposes but that elected treatment as an S corporation for federal income tax purposes did not have to recognize the gain from its deemed sale of assets, because the Sec. 338(h)(10) election was not an election made by the corporation but rather by its out-of-state shareholders. ³⁵ Accordingly, the court explained that the taxpayer’s Georgia taxable net income must be determined as if the Sec. 338(h)(10) election had not existed.

Illinois

P.A. 95-0233, Laws 2007, added a requirement that interest expense and other expenses incurred by a taxpayer related to earning income exempt from Illinois income tax under a federal statute or constitution had to be netted out of the exempt income. SB 783, Laws 2008, completely reverses that requirement to net out related expenses from the subtraction modification.

Kentucky (U.S. Supreme Court)

In a decision that included four concurring opinions and two dissenting opinions, the U.S. Supreme Court reversed a Kentucky court of appeals decision and held that Kentucky’s statutory bond taxation scheme (which taxes the income from sister states’ bonds while exempting the interest on Kentucky bonds) does not violate the U.S. Constitution’s Commerce Clause. ³⁶

Maine

MRS updated its guidance for calculating the modifications to Maine income due to the state’s decoupling from federal tax law changes. ³⁷

New York

Effective for tax years beginning on or after January 1, 2008, New York has decoupled from the Sec. 199 domestic production activities deduction. ³⁸

In another development, the New York Department of Taxation and Finance announced that it will apply the Bausch & Lomb decision to all open years. ³⁹ Accordingly, the gain or loss from the sale of stock in a subsidiary will be included in computing entire net income when the subsidiary is included with its parent corporation in a combined Article 9-A report in the year of the sale.

Tennessee

A Tennessee Court of Appeals affirmed that gains from a Sec. 338(h)(10) deemed asset sale as reported on its federal pro forma income tax return were properly included in the sold subsidiary’s Tennessee excise tax base, because Tennessee’s law requires conformity to reported federal taxable income. ⁴⁰ There is no additional requirement that the subsidiary actually have incurred and paid the federal income tax as a prerequisite to imposition of the Tennessee excise tax. Because the disposed property was an integral part of the subsidiary’s regular business, the realized gains from the sale constituted business earnings subject to apportionment under the functional test.

Allocable/Apportionable Income

Alabama

An administrative law judge (ALJ) held that a manufacturer’s gain from the sale of its stock in an affiliated foreign company was allocable outside Alabama as nonbusiness income because its stock ownership was not operationally related to its business in Alabama and constituted nonbusiness income under both the transactional and functional tests. ⁴¹Applying the factors of functional integration, centralization of management, and economies of scale, the ALJ also held that the two companies were not involved in a unitary business despite sharing a common parent and being in the same general line of business.

In another case, the Alabama Court of Civil Appeals reversed a circuit court to hold that a paper-related consumer products manufacturer must classify income from the sale of its Alabama-based pulp/paper manufacturing facility and adjacent timberlands as apportionable business income because the sale was performed in the regular course of its business operations under the transactional test. ⁴²

Arizona

A unitary affiliate’s gain on the sale of stock in a foreign subsidiary constituted apportionable business income under the functional test because the stock was deemed used in the company’s business to control the foreign subsidiary so that it would provide a portion of the company’s global marketplace. ⁴³

Illinois

The U.S. Supreme Court vacated the Illinois appellate court’s MeadWestvaco decision, which previously held that the investment by Mead Corporation (the predecessor of MeadWestvaco) in its Lexis business division was of an operational, rather than an investment, nature so income derived from Lexis’s sale was characterized as apportionable business income. ⁴⁴ The Supreme Court explained that the state court erred in considering whether a sold subsidiary served an operational purpose in its parent corporation’s businesses because the “operational function” references in Container Corp. ⁴⁵ and Allied-Signal ⁴⁶ were not intended to modify the unitary business principle by adding a new apportionment ground. Rather, the operational function concept merely recognizes that an asset can be a part of a taxpayer’s unitary business even without a unitary relationship between the payor and the payee.

Illinois also argued that the Supreme Court should affirm the appellate court’s decision on the alternate ground that the record amply demonstrated that Lexis did substantial business in Illinois and that Lexis’s own contacts with the state were enough to justify the apportionment of Mead’s capital gain on the sale of Lexis. Explaining that Illinois was asking the Supreme Court to recognize “a new ground for the constitutional apportionment of intangibles based on the taxing State’s contacts with the capital asset rather than the taxpayer,” the Court declined to rule on the issue, stating that this issue was “neither raised nor passed upon in the state courts.” While the lower trial court had found that Lexis was not a unitary part of the company’s business, the Illinois Appellate Court never addressed the issue. Thus, the U.S. Supreme Court remanded the case with instructions that the state appellate court could determine whether the taxpayer and the Lexis business constituted a unitary business.

Kansas

Senate Substitute for HB 2434, Laws 2008, added a functional test to the definition of business income.

In another development, the Kansas Board of Tax Appeals held that for corporate income tax purposes, proceeds from an installment sale of an oil refinery were nonbusiness income entirely allocable outside Kansas because the sale was an extraordinary event that occurred in response to unusual industry expenses and dire financial circumstances. ⁴⁷

Based upon the parties’ settlement agreement and joint motion to vacate, the Utah Supreme Court vacated the district court’s opinion in Chambers v. State Tax Commission. ⁴⁸ which previously held that a Sec. 338(h)(10) fictional asset liquidation gain should be classified as nonbusiness income allocable to the subsidiary’s out-of-state commercial domicile under both the transactional and functional tests.

Wisconsin

An out-of-state company that sold its general partnership interest had to apportion the resulting capital gain to Wisconsin, rather than allocate it entirely outside the state, because the two entities were engaged in a unitary business and the company’s investment in the partnership served an operational (not investment) function. ⁴⁹

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 article, 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.

EditorNotes

Karen Boucher is a partner with Deloitte Tax LLP in Milwaukee, WI, and a member of the AICPA’s State & Local Tax Technical Resource Panel. Shona Ponda is a senior manager with Deloitte Tax LLP in Atlanta, GA. Both are members of Deloitte Tax LLP’s Washington National Multistate Tax practice. For more information about this article, contact Ms. Boucher at kboucher@deloitte.com .

 

 

 

 

 

 

Notes

¹ AZ DOR Hearing Officer Decision No. 200700083-C (3/27/08).

² Quill Corp. v. North Dakota Tax Comm’r, 504 U.S. 298 (1992).

³ MBNA Am. Bank, N.A. v. Department of State Rev., 895 N.E.2d 140 (Ind. Tax Ct. 2008).

⁴ In re KFC Corp. v. Department of Rev., No. 07DORFC016 (Iowa Dep’t of Inspections and Appeals, Admin. Hearing Div. 8/8/08).

⁵ Bridges v. Geoffrey, Inc., 984 So. 2d 115 (La. Ct. App. 2008). The Louisiana Supreme Court denied review of the case in Bridges v. Geoffrey, Inc., 978 So. 2d 370 (La. 2008).

⁶ ME Rev. Servs., 18 Maine Tax Alert 2 (February 2008).

⁷ The Classics Chicago, Inc., No. 24-C-08-002761 (Md. Cir. Ct. 10/8/08).

⁸ Nordstrom, Inc. v. Comptroller, Nos. 07-IN-OO-0317, 07-IN-OO-0318, and 07-IN-OO-0319 (Md. Tax Ct. 10/24/08).

⁹ MO DOR Letter Ruling LR 5192 (10/22/08).

¹⁰ Vector Mktg. Corp. v. Department, 942 A.2d 1261 (N.H. 2008).

¹¹ Lanco, Inc. v. Director, Div. of Tax’n, 908 A.2d 176 (N.J. 2006), cert. denied, S. Ct. Dkt. No. 06-1236 (U.S. 6/18/07).

¹² Praxair Tech., Inc. v. Director, Div. of Tax’n, No. A-6262-06T3 (N.J. Super. Ct. App. Div. 12/15/08).

¹³ New York State 2008–2009 Budget (S.6807-C/A.9807-C, Laws 2008); New York Tax Law §1451(c)(1).

¹⁴ SC DOR Rev. Rul. No. 08-1 (1/11/08).

¹⁵ Geoffrey, Inc. v. South Carolina Tax Comm’n, 437 S.E. 2d 13 (S.C. 1993), cert. denied, 510 U.S. 992 (1993).

¹⁶ VA Tax Comm’r Ruling, Pub. Doc. 08-139 (7/30/08).

¹⁷ Substitute SB 680, Laws 2008.

¹⁸ Fleet Funding Inc. v. Commissioner of Rev., Nos. C271862–63 (Mass. App. Tax Bd. 2/21/08).

¹⁹ SB 4173, Laws 2008.

²⁰ Colgate-Palmolive Co. v. Department of Rev., 988 So. 2d 1212 (Fla. Dist. Ct. App. 2008).

²¹ Golden West Fin. Corp. v. Department of Rev., 975 So. 2d 567 (Fla. Dist. Ct. App. 2008).

²² 86 IL Admin. Code §100.2310.

²³ Ch. 539 (LD 2289), Laws 2008.

²⁴ ME Rev. Servs., Maine Modifi cations Related to Federal NOLs—Examples (C Corporations) (December 2008).

²⁵ VT Dep’t of Taxes, Technical Bulletin TB-40 (1/7/08, revised 10/7/08).

²⁶ Ex parte VFJ Ventures, Inc. f/k/a VF Jeanswear, Inc., No. 1070718 (Ala. 9/19/08).

²⁷ IN DOR Ltr. of Finding No. 06-0511 (1/30/08).

²⁸ IN DOR Ltr. of Finding No. 07-0062 (2/1/08).

²⁹ IN DOR Ltr. of Finding No. 07-0131 (2/1/08).

³⁰ Family Dollar Stores of Ohio, Inc. v. Tax Comm’r, No. 2005-V-469 (Ohio Bd. Tax App. 1/4/08).

³¹ PacifiCare Health Sys. Inc. v. Department of Rev., No. TC 4762 (Or. Tax Ct. 7/1/08).

³² Conference Substitute Amendment 1 to AB 1, Laws 2008.

³³ KS DOR Opinion Letter No. O-2008-004 (9/2/08); MA DOR Directive No. 08-07 (12/18/08); NJ Div. of Tax’n, 37 NJ State Tax News 2 (Summer 2008); WI DOR, News for Tax Practitioners (2/26/08).

³⁴ MN DOR Rev. Notice 08-08 (7/21/08); PA DOR Corporation Tax Bulletin 2008-05 (12/1/08); Va. Pub. Doc. 08-169 (9/11/08).

³⁵ Trawick Constr. Co. v. Department of Rev., No. 2004CV 94454 (Ga. Super. Ct., Fulton County 3/4/08).

³⁶ Department of Rev. of Ky. v. Davis, 553 U.S. ___, 128 S. Ct. 1801 (2008).

³⁷ ME Rev. Servs., Bonus Depreciation, Sec. 179 Expense, & Maine Income Tax (December 2008)

³⁸ New York State 2008–2009 Budget (S.6807-C/A.9807-C, Laws 2008).

³⁹ NY Dep’t of Tax’n and Fin., Technical Service Bureau Memorandum TSB-M-08(3) C (3/10/08), regarding In re Bausch & Lomb, Inc., DTA 819883 (NY Tax App. Trib. 12/20/07).

⁴⁰ Newell Window Furnishing, Inc. v. Commissioner of Rev., No. M2007-02176- COA-R3-CV (Tenn. Ct. App. 12/9/08).

⁴¹ Tate & Lyle Ingredients Americas, Inc. v. Department of Rev., No. CORP. 07-162 (Ala. Dept. of Rev., Admin. Law Div. 1/15/08), reh’g denied 6/23/08.

⁴² Kimberly Clark Corp. v. Department of Rev., No. 2061117 (Ala. Civ. App. 3/21/08).

⁴³ AZ DOR Hearing Offi cer Decision No. 200600091-C (9/8/08).

⁴⁴ MeadWestvaco Corp. v. Illinois Dep’t of Rev., 553 U.S. ___, 128 S. Ct. 1498 (2008).

⁴⁵ Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159 (1983)

⁴⁶ Allied-Signal, Inc. v. Director, Div. of Tax’n, 504 U.S. 768 (1992).

⁴⁷ In re Frontier Oil Corp., No. 2006-913-DT (Kan. Bd. Tax App. 3/20/08).

⁴⁸ Chambers v. State Tax Comm’n, No. 20070467-SC (Utah 1/25/08), vacating No. 050402915 TX (Utah Dist. Ct. 1/29/07).

⁴⁹ Louis Dreyfus Petroleum Prods. Corp. v. Department of Rev., No. 08CV494 (Wis. Cir. Ct. 10/7/08).