Section 1 Domestic Corporations

• Library: Tax Law 2009

A corporation organized under the laws of the state of Missouri is subject to the Missouri corporate income tax regardless of whether it actually conducts business or maintains any physical presence in Missouri. Section 143.441.1(1), RSMo 2000. As a matter of due process, corporate domicile alone appears to be a sufficient basis for assertion of jurisdiction to impose an income tax. See Shaffer v. Carter, 252 U.S. 37 (1920). The more important issue for a domestic corporation is whether it is entitled to allocate and apportion its income. The terms “allocation” and “apportionment” are sometimes used interchangeably to refer to the division of a corporation’s income among various states. Technically, allocation of income is the direct attribution of income to a particular state or foreign country, while apportionment is the division of income among states in accordance with a formula. In this chapter, the terms are used in that technical sense. Missouri offers corporations the option of allocating and apportioning income under the Multistate Tax Compact (the Compact), § 32.200, RSMo 2000, or under § 143.451, RSMo 2000 (referred to as the “single-factor formula”).

Historically, the question of whether a domestic corporation was entitled to allocate and apportion its income was resolved by reference to whether the use of capital or labor outside of Missouri was a sufficient cause of the production of that income. In re Kansas City Star Co., 142 S.W.2d...