Market-based sourcing may require a lookthrough approach for apportionment.
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Allocation & Apportionment
State tax considerations around the sale of a partnership interest
This item discusses how owners selling partnership interests should address which states may attempt to tax the entire gain, how taxation of the gain may be divided among the states where the partnership does business, compliance considerations, and technical developments and trends that may affect the transaction.
In Texas, the rules of the game have changed for sourcing of receipts
As amended, Administrative Rule Section 3.591,
Margin: Apportionment, significantly revises the rules for sourcing receipts to Texas, and almost all taxpayers, particularly those engaged in service industries, will be affected by the changes.
Managing state taxes in an uncertain world
Businesses with employees working remotely in a new location as a result of the pandemic should
carefully evaluate the rules in those states to ensure proper withholding.
Diagnosing the SALT effects of COVID-19: Part 1
The coronavirus pandemic raises several key state tax issues.
Potential pitfalls of state income tax incentives for passthroughs
The benefit of a state income tax credit, if it is earned in a state where the owner is not resident, is often lost.
Income taxation of trusts in California
The California Superior Court determined that all income, including California-source income, is subject to the apportionment formula.
The canned software conundrum: Inconsistent state corporate income tax treatment
This item discusses the interplay between Public Law 86-272 (15 U.S.C. §§381–384) and the federal
treatment of computer software, as well as two states’ approaches to the corporate income tax treatment of canned software.
A pragmatic approach to sourcing sales of services
This column shares a few thoughts on sales sourcing methodology for readers who are not state tax geeks.
New Jersey’s Sourcing Rule for Gain on Dispositions of Interests in Flowthrough Entities Can Be a Real Deal-Killer
Stress points that often produce significant difficulties include apportionment issues stemming from the mixed entity and aggregate treatment of flowthrough entities, the attribution of nexus up and down tiered flowthrough structures, and the impact on individual owners of residency rules and unusable credits for taxes paid to other states.
Oregon Courts’ Recent Examination of UDITPA Provisions
Recently, Oregon courts have issued important state income tax decisions, which may have potential application within and outside the state.
Indiana: Where Market-Based Sourcing and Income-Producing Activity Collide
The Indiana Department of Revenue has blurred the edges of two approaches to sourcing sales to create a potential trap for the unwary, opportunity for the savvy, and fertile ground for litigation.
Multistate Tax Compact Amendments May Have Major Effect on States
Recent Multistate Tax Compact amendments address significant issues and may result in statutory amendments in some states.
Recent State Tax Developments
Several important developments have occurred in the area of state taxation so far in 2014.
Continuing Efforts to Amend the Multistate Tax Compact
Multistate Tax Compact changes would alter the model allocation and apportionment statute followed by many states for purposes of their corporation income tax laws.
Illinois Apportionment of Service Income and Unitary Partnerships
Effective for tax years ending on or after Dec. 31, 2008, Illinois enacted a form of market sourcing for sales of services. As part of this change, Illinois excludes a taxpayer’s sales of services from the sales factor when the taxpayer is not subject to tax in the state where the services are received.
Alternative Apportionment: Fairness Is Not the Only Factor
Alternative apportionment provides taxpayers and tax administrators with a means to obtain ad hoc relief when the application of a state’s standard apportionment formula fails to reflect a taxpayer’s business activities in the state.
Apportionment Using Market-Based Sourcing Rules: A State-by-State Review
This article discusses issues in applying market-based sourcing rules and looks at how those rules work in the states that have adopted them.
Alternative Apportionment: Tough for the Taxpayer, (Too) Easy for the States
Alternative apportionment provisions aim to provide limited relief through the possibility of “opting out” of the standard apportionment formulas when their application would produce particularly inequitable results.
California Changes Combined Reporting for Assignment of Combined Group Sales
For tax years beginning on or after January 1, 2011, California requires that receipts from the sale of tangible personal property of all members of a combined reporting group be assigned (i.e., sourced) to California, regardless of whether a specific member has nexus in the state.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
