PORTFOLIO

Connecticut Corporate Business Tax (Portfolio 1960)

Be a trusted advisor to your clients with Bloomberg BNA Tax Portfolios. In this Portfolio, our expert authors provide comprehensive discussions on a wide range of issues dealing with the taxation of corporate entities in Connecticut and considers important issues for all business enterprises doing business in the state.

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DESCRIPTION

The Connecticut Corporate Business Tax Portfolio gives a detailed analysis of the federal limitations imposed on Connecticut's corporate tax scheme, including a discussion of constitutional limitations such as the due process and commerce clauses and federal statutory limitations, such as Pub. L. No. 86–272.


The authors offer insights concerning the Connecticut Corporate Business Tax, specifying how the tax is computed and noting the types of activities and entities that are exempt from the tax. The discussion includes special issues affecting specific entities such as S corporations, insurance companies, and financial institutions.


The Portfolio also addresses apportionment and allocation considerations and describes the credits and deductions available to corporate entities. Return requirements and administrative procedures are also discussed.


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AUTHORS

CRAIG S. WECHMAN CPA

Craig S. Wechman, CPA, is with Morgan Stanley in New York, NY. Craig is a member of the firm's state and local tax practice, which emphasizes multistate income and franchise tax issues.  Craig has served on the AICPA's Multistate Corporate Tax Committee.

Credentials / A graduate of Rutgers College, Craig received a Masters Degree in Taxation from the State University of New York at Albany.


KEITH H. KRUGER CPA

Keith H. Kruger, CPA, is a senior manager at KPMG LLP in Stamford, Connecticut. Keith is also a member of the firm's state and local tax practice.

Credentials / A graduate of the University of Connecticut, Keith is a member of the American Institute of Certified Public Accountants and the Connecticut Society of Certified Public Accountants.


TABLE OF CONTENTS

Detailed Analysis

1960.01. INTRODUCTION

1960.02. JURISDICTION TO TAX

A. Federal Limitations

B. State Overview

1960.03. EXEMPT ENTITIES

Introductory Material

A. S Corporations

B. Insurance Companies

C. Railroad Companies

D. Miscellaneous Entities

1960.04. NET INCOME TAX BASE

A. Overview

B. Additions

1. Exempt Interest Income

2. State Income Taxes

3. Related Party Transactions

4. Depreciation

C. Subtractions

1. Corporate Transactions

2. Dividend Deduction

3. Capital Loss Carryover

4. Capital Gain From Sale of Preserved Land

5. Federal Credits

6. Net Operating Losses

7. Commissioner's Discretionary Authority Regarding Related-Party Transactions

1960.05. CAPITAL STOCK TAX BASE

1960.06. APPORTIONMENT OF NET INCOME

A. Overview

B. Right to Apportion

C. Allocation

D. Single Sales Factor

E. Three Factor Formula

1. Property Factor

2. Payroll Factor

3. Sales Factor

F. General and Limited Partners Factor

G. Special Apportionment Factors

1. Motor Carriers

2. Manufacturers

3. Broadcasters

4. Financial Service Companies

a. Key Definitions

b. Determination of Apportionment Factor

c. Sourcing Specific Types of Receipts

(1) Lease or Rental Receipts

(2) Loan Receipts

(3) Receipts Related to Investment Assets

(4) Receipts From Certain Services Provided to Investment Entities

(5) Receipts From Certain Services Provided to Pension Funds or Retirement Accounts

(6) Receipts From Services Provided to Regulated Investment Companies

(7) Receipts From Credit Card Activities

(8) Receipts From Brokerage Services

(9) Receipts From Other Services

(10) Key Sourcing Definitions

1960.07. APPORTIONMENT OF CAPITAL TAX BASE

A. General Overview

B. Apportionment of Corporate Partners’ Capital Base

C. Commissioner's Authority to Change Apportionment Method

1960.08. COMBINED RETURNS

A. Overview

B. Mechanics of the Combined Return

C. Combined Net Operating Loss

D. Alternative Apportionment Method for Combined Filers

1960.09. TAX CREDITS

Introductory Material

A. Procedure for Claiming Connecticut Tax Credits

1. Ordering Rules for Credits

2. Combined Tax Credits

B. Job Creation and Investment Tax Credits

1. Enterprise Zone Tax Credit

2. Human Capital Investment Credit

3. Fixed Capital Tax Credit

4. Hiring Incentive Tax Credit

5. Apprenticeship Training Tax Credit

6. Insurance Reinvestment Fund Credit

7. Financial Institutions Credit

8. Displaced Electric Worker Credit

9. Displaced Worker Credit

10. Job Creation Credit

C. Environmental Tax Credits

1. Clean Alternative Fuel Credit

2. Urban and Industrial Site Reinvestment Credit

3. Donation of Open Space Land Credit

D. Research and Development Tax Credits

1. Non-Incremental Research and Development Credit

2. Incremental Research and Development Credit

3. Research and Development Credit for Grants to Institutions of Higher Education

4. Exchange of R& D Credits

E. Machinery and Equipment Tax Credits

1. Machinery and Equipment Expenditure Credit

2. Manufacturing Facility and Service Facility Credits

a. Manufacturing Facility Credit Percentage

b. Definition of a Manufacturing Facility

c. Service Facility Credit Percentage

d. Definition of a Service Facility

e. Determination of Tax Allocable to a Manufacturing or Service Facility

f. Occupancy and Transferability Requirements

F. Technology Tax Credits

1. Computer Donation Credit

2. Electronic Data Processing Property Tax Credit

G. Housing and Community Tax Credits

1. Historic Homes Rehabilitation Credit

2. Neighborhood Assistance Tax Credit

3. Housing Program Contribution Credit

4. Employer-Assisted Housing Tax Credit

5. Energy Conservation and Job Training

6. Child Daycare Facility Credit

7. Historic Structures Credit

H. Other Credits and Incentives

1. Small Business Guaranty Fee Tax Credit

2. Traffic Reduction Programs Credit

3. Open Space Tax Exemption

4. Movie and Digital Media Production Tax Credit

1960.10. COLLECTION AND PAYMENT OF TAX

A. Due Date of Annual Return

B. Estimated Tax Payments

C. Business Entity Tax

D. Changes by the Federal Government

E. Amended Returns

F. Protest and Appeal Process

G. Amnesty Program


WORKING PAPERS

Working Papers

Item Description Sheet

Worksheet 1 Conn. Dept. of Rev. Svcs., PS 2001(3) “Your Rights as a Connecticut Taxpayer”

Worksheet 2 BNA 2008 Survey of State Tax Departments: Connecticut Questionnaire

Worksheet 3 Conn. Dept. of Rev. Svcs., “Nexus Declaration”

Worksheet 4 Conn. Dept. of Rev. Svcs., SN 2002(10) “Bonus Depreciation for Connecticut Corporation Business Tax Purposes”

Worksheet 5 Conn. Dept. of Rev. Svcs., SN 93(26) “Effect of Allied-Signal, Inc. v. Director, Division of Taxation”

Worksheet 6 Millward Brown, Inc. v. Commissioner of Revenue Services

Bibliography

Bibliography