Alternative Apportionment: Seeking a Fairly Apportioned Tax Base in a World of Increasing Reliance on the Sales Factor

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To make a case for the use of an alternative apportionment formula, a taxpayer must rely on a facts-based argument that shows the relationship of the factor to its income. In this article, authors Alex Meleney and Frederick H. Thomas, of Deloitte Tax LLP, discuss the standards that courts have used in determining whether relief is warranted. The authors also consider how alternative apportionment could be applied to the increasingly common single-sales factor apportionment formula and suggest that such formulas may be more susceptible to an alternative apportionment argument.

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