Jurisdiction
and Nexus: The latest interpretations by the states and the Multistate Tax Commission of Wrigley and Quill. State tax treatment of passive investment companies, financial institutions, service companies, credit card and Internet activities. Effect of having sales reps working at home, officers residing in-state, deliveries in company and third-party trucks, leased or mobile property, in-state affiliates, and other in-state activities. Impact of voluntarily registering to do business in a state. Nexus standards under newly revised state tax systems such as the Ohio CAT, Texas Franchise Tax and Michigan Business Tax. Planning ideas for minimizing state income taxes.
The Unitary Concept: An analysis of current cases interpreting the extent of a state’s authority to apply the unitary concept in its many forms, e.g., domestic, worldwide, water’s edge combination. Unique statutory and regulatory definitions. The MTC approach. Legislative developments. Structuring business to best take advantage of unitary reporting. Application of the unitary concept to non-income taxes.
Business and Nonbusiness
Income: Recent interpretations of the business/nonbusiness
distinction by UDITPA and non-UDITPA states. Determining “operational
significance.” Using the functional, transactional, and unitary
tests to minimize state taxation of short and long-term investment
income, dividends, capital gains, rents, royalties, 338(h)(10) income,
and other intangibles. Effect of operating under centralized cash
management, through divisions, partnerships, S corporations, LLCs
and other special situations on a business/nonbusiness determination.
Treatment of complete and partial liquidations. Legislative developments; update on NCCUSL efforts to reconsider the UDITPA definition of business income.
Conformity and Tax Base Issues: Limitations imposed
by states on the deductibility of NOLs, depreciation, taxes imposed
by other states. State tax treatment of related party dividends
and fees, foreign source income, federal obligations and 338(h)(10)
transactions. Computation of state AMTs, including the New Jersey “alternative
minimum assessment” and the Kentucky “alternative minimum
calculation.”
Apportionment Factors: Characterizing
business activities for purposes of apportionment. Does the company
sell tangibles, intangibles, services, mixed products or a combination?
Sourcing issues and methods. Treatment of installment, intercompany,
cross-border, drop shipment and dock sales; investment activities.
Apportioning the income of service providers and specialized industries.
What’s new in the Joyce/Finnigan controversy?
Apportionment questions in business dispositions and other restructuring
transactions. Update on NCCUSL proposal to revise UDITPA apportionment rules.
Flow-Through Entities and Their Owners: Nexus,
unitary, apportionment, tax base, conformity issues as applied
to flow-through entities and their owners. Hot topics in this area
such as how to handle non-resident owner withholding and coping
with the various state tax reforms designed to reach the income
of flow-through entities.
Accounting for Uncertainty in State Income Taxes: FIN 48: its requirements and the impact this FASB interpretation has had on the priorities of multistate corporate tax departments and their advisors. Discussion of the major issues in accounting for state income taxes on the financial statement. Practical application of FIN 48 and recent developments.
Ethical and Procedural
Issues: Ethical and strategic dilemmas involved
in conducting state income tax audits and running the state tax
department, including application of ethical standards set by the
AICPA, ABA, state CPA societies and bar associations. Determining
the availability of refunds and the associated procedural requirements,
such as payment under protest and “pay
to play.” Writing
a protest; alternative dispute resolution; the right to an administrative
appeal. Statute of limitations issues, including the effect
of RARs, waivers, settling with the IRS, and choosing the
date from which the limitations period should be measured.
Legislative developments: update on NCCUSL efforts to reconsider the UDITPA definition of business income.
Problems
Session: Practical application of the concepts
presented.
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