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Income Taxes: State Formulary Apportionment Methods (Minnesota Through Wyoming) (Portfolio 1170)

Product Code: TPOR44
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Income Taxes: State Formulary Apportionment Methods (Minnesota Through Wyoming) focuses on the allocation and apportionment of income on a state-by-state basis and provides a detailed discussion of the different methods the states use in various situations. In addition to identifying when a taxpayer has the right to allocate and apportion income, this Portfolio, written by Joseph X. Donovan, Sullivan & Worcester, J. Gary Dean, CPA, and Karen Nakamura, CPA, provides guidelines for determining the classification of business and nonbusiness income; the rules for sourcing nonbusiness income; the computation of the apportionment formula and its component factors; the use of alternative methods of allocation and apportionment; special industry allocation and apportionment rules; and other miscellaneous issues such as apportionment for capital stock and net worth tax purposes. 

This Portfolio provides information for each state in each of the following categories:

  • Division of Income,
  • Business/Nonbusiness Income,
  • Allocation Methods,
  • Apportionment Formula,
  • Sales Factor,
  • Property Factor,
  • Payroll Factor,
  • Alternative Methods,
  • Special Industries, and
  • Other Issues.

Income Taxes: State Formulary Apportionment Methods (Minnesota Through Wyoming) allows you to benefit from: 

  • Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area.
  • Invaluable practice documents including tables, charts and lists.
  • Plain-English guidance from world-class experts.
  • Real-world and in-depth analysis that lets you explore various options.
  • Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more.
  • Alternative approaches to both common and unique tax scenarios.

This Portfolio is part of the Premier State Tax Library, a comprehensive series, which covers major state tax transactions and issues with expert, in-depth analysis, and offers commentary on a wide range of multi-state and state-specific taxation topics, including Sales and Use, Corporate Income, Individual Income, Property, Gross Receipts, Limitations on States' Authorities to Tax, Credits and Incentives, Electronic Commerce, Mergers and Acquisitions, Procedure and Administration, Special Industries, and more.

 

Detailed Analysis

1170.01. ALLOCATION AND APPORTIONMENT

A. Constitutional Background

B. Commerce Clause

C. Due Process Clause

D. Public Law 86–272

E. Definition of Terms

F. Division of the Tax Base

G. Business vs. Non–Business Income Distinction

1. Non–Business Income

2. Business Income

H. Sales Factor Introduction

1. “All–or–Nothing” or “Pro Rata” Test

2. Treatment of Receipts from the Licensing of Intangibles

I. Property Factor Introduction

J. Payroll Factor Introduction

K. Alternative Methods

L. Allocation And Apportionment For Groups Of Related Entities

1170.02. MINNESOTA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.03. MISSISSIPPI

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.04. MISSOURI

A. Division of Income

1. UDITPA

2. Optional State Method

B. Business/Nonbusiness Income

1. UDITPA

2. Optional State Method

C. Allocation Methods

1. UDITPA

2. Optional State Method

D. Apportionment Formula

1. UDITPA

2. Optional State Method

E. Sales Factor

1. UDITPA

2. Optional State Method

F. Property Factor

1. UDITPA

2. Optional State Method

G. Payroll Factor

1. UDITPA

2. Optional State Method

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.05. MONTANA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.06. NEBRASKA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.07. NEVADA

Introductory Material

A. Other Issues

1170.08. NEW HAMPSHIRE

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.09. NEW JERSEY

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.10. NEW MEXICO

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.11. NEW YORK

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

1. Tax Years Beginning 2006

2. Tax Years Before 2006

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.12. NORTH CAROLINA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.13. NORTH DAKOTA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.14. OHIO

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.15. OKLAHOMA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.16. OREGON

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.17. PENNSYLVANIA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.18. RHODE ISLAND

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.19. SOUTH CAROLINA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.20. SOUTH DAKOTA

Introductory Material

A. Other Issues

1170.21. TENNESSEE

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.22. TEXAS

A. Division of Income

1. Net Taxable Capital

2. Earned Surplus

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

1. Net Taxable Capital

2. Earned Surplus

E. Gross Receipts Factor

1. Net Taxable Capital

2. Earned Surplus

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.23. UTAH

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.24. VERMONT

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.25. VIRGINIA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.26. WEST VIRGINIA

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.27. WISCONSIN

A. Division of Income

B. Business/Nonbusiness Income

C. Allocation Methods

D. Apportionment Formula

E. Sales Factor

F. Property Factor

G. Payroll Factor

H. Alternative Methods

I. Special Industries

J. Other Issues

1170.28. WYOMING

Introductory Material

A. Other Issues

Working Papers

Item Description Sheet

Worksheet 1 Business/Non–business Income Audit Guidelines

Worksheet 2 Corporate Income Tax Apportionment Formulas

Worksheet 3 UDITPA (Article IV of Multistate Tax Compact) Uniform Division of Income for Tax Purposes Act – Annotated

Worksheet 4 Multistate Tax Commission – Allocation and Apportionment Regulations Pertaining to Business/Nonbusiness Income

Worksheet 5 Multistate Tax Commission – Proposed Regulations on Allocation and Apportionment – Excerpts (“April 1995 Proposal”)

Worksheet 6 American Institute of Certified Public Accountants Comments Regarding Multistate Tax Commission Proposed Amendment to MTC Regulation IV.1.(a). Business and Nonbusiness Income Defined

Worksheet 7 Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States Under Public Law 86–272 as Revised January 22, 1993 (Phase One Statement)

Worksheet 8 Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States Under Public Law 86–272 as Adopted July 29, 1994 (Phase Two Statement)

Worksheet 9 Excerpt from BNA 2008 Survey - Throwback/Throwout Rules

Worksheet 10 State Conformity to UDITPA

Worksheet 11 State Throwback Rules

Bibliography

Bibliography

J. Gary Dean
J. Gary Dean is a Multistate Tax Services Partner in the Philadelphia Office of PricewaterhouseCoopers LLP. Mr. Dean serves as the National Technical Services Leader of the Firm's Multistate Tax Services Practice, in which capacity he is responsible for all aspects of multistate tax planning, research, and compliance. Mr. Dean is a Lecturer in Law in the Graduate Tax Program at Villanova University and a frequent speaker before business and professional organizations, including the Committee on State Taxation, Tax Executives Institute, the Georgetown University State and Local Tax Institute, and the California Tax Policy Conference. In addition, he has discussed state tax issues on national television and has been accepted as an expert witness in state litigation matters. Gary is a member of the State Tax Advisory Board of Commerce Clearing House, the Editorial Board of the Journal of S Corporation Taxation, and an editor for the “State Tax Topics” column of the Pennsylvania CPA Journal. Gary received a B.A. from Duke University, an M.B.A. from the Wharton School of the University of Pennsylvania, and an M.S.T from Villanova University. 
Joseph Donovan
Joseph X. Donovan is a Principal in the Boston office of PricewaterhouseCoopers LLP. Before joining PricewaterhouseCoopers LLP in 1984, Joe was Deputy Chief of the Legal Bureau of the Massachusetts Department of Revenue. He also served as Tax Counsel in the Rulings & Regulations Bureau of the Department. Author of the Massachusetts Sales and Use Tax Manual, he is the former chair of the State Tax Committee of the Massachusetts Society of CPAs and serves on the advisory board of State Tax Notes. Joe also served as an advisor on state tax matters to Governor Weld's Council on Economic Growth and has written and lectured widely on state and local tax matters. Joe received an A.B. from Cornell University and a J.D. from the University of Michigan Law School. 
Karen Nakamura
Karen Nakamura received a B.S. from St. John's University and an M.S.T. from Pace University. Formerly a State Tax Law Editor with Tax Management Inc., Karen is now with PricewaterhouseCoopers LLP in the Washington, D.C. office. Prior to joining Tax Management Inc., she worked in the Washington, D.C., Boston, and New York offices of PricewaterhouseCoopers LLP as a Multistate Tax Manager.