Allocation & Apportionment
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.
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.
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.
The coronavirus pandemic raises several key state tax issues.
The benefit of a state income tax credit, if it is earned in a state where the owner is not resident, is often lost.
The California Superior Court determined that all income, including California-source income, is subject to the apportionment formula.
This column shares a few thoughts on sales sourcing methodology for readers who are not state tax geeks.
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.
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.
Recently, Oregon courts have issued important state income tax decisions, which may have potential application within and outside the state.
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.
Recent Multistate Tax Compact amendments address significant issues and may result in statutory amendments in some states.
Several important developments have occurred in the area of state taxation so far in 2014.
Multistate Tax Compact changes would alter the model allocation and apportionment statute followed by many states for purposes of their corporation income tax laws.
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 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.
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 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.
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.
Effective planning and recordkeeping in the apportionment area call for an in-depth understanding of a taxpayer’s business model, including technology-based processes and the related cost accounting systems used, in order to source revenues to the appropriate jurisdiction.
