Extract
Current corporate income tax developments.
This two-part article discusses a myriad of recent state tax activity in the corporate income tax area. Part I addresses nexus, tax base and entity-classification conformity; Part II, in the next issue, examines apportionment, administration and other developments.
During 2001, an overwhelming number of 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cases were decided; regulations were proposed, issued and modified; and bulletins and rulings were issued, released and withdrawn. Because it is impractical to summarize all of these activities, Part I of this article focuses on some of the more interesting items in the corporate income tax areas of nexus, tax base and entity-classification conformity. Part II, in the April 2002 issue, will discuss apportionment, filing methods and unitary groups. Both parts also address other significant income tax and nonincome tax developments. Nexus Application of P.L. 86-272 Public Law (P.L.) 86-272 prohibits a state from taxing a business when its only connection with the state is the solicitation of sales orders for tangible personal property sent outside the state for approval or rejection and, if approved, are filled and shipped by the business from a point outside the state. Several cases, rulings and legislative bills addressed whether a taxpayer's in-state activities fall within the protection of P.L. 86-272. * MTC At its annual meeting, the Multistate Tax Commission (MTC) adopted a resolution amending the MTC Statement of Information Concerning Practices of the MTC and Signatory States Under Public Law 86-272 by deleting section IV.A.20, which had identified as an unprotected activity the shipment or delivery of goods into the state by private or contract carrier. * California A court of appeals affirmed (1) a superior court decision that a parent with no contacts in California could be subject to tax based on a wholly owned subsidiary's offices there. Readers Digest Association (RDA) sold magazines into the state; the subsidiary sold or solici...See the full content of this document
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