Summary
Part 1
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Extract
Current corporate income tax developments.
EXECUTIVE SUMMARY
* 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. ********** This two-part article discusses recent state activity in the area of corporate income tax. Part I addresses nexus, Sec. 338(h)(10) transactions, allocable/ apportionable income, and tax base. 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were decided; regulations were proposed, issued, and modified; and bulletins and rulings were issued, released, and withdrawn.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. Nexus * Alabama 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...See the full content of this document
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