Bloomberg Tax Q&A With David Fruchtman, Author of the New Unitary Business Portfolio

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

Bloomberg Tax is proud to announce our new “Income Taxes: Definition of a Unitary Business” portfolio (1110-3rd T.M.). State tax law editor Lindsay Trakso spoke with the author, David Fruchtman, chair of State and Local (Subnational) Taxation at Rimon P.C., about the new portfolio.

David Fruchtman Lindsay Trasko

Interview by Lindsay Trasko

Bloomberg Tax: Congratulations, David, on the publishing of the new portfolio.

David Fruchtman: Thank you. I was honored when Bloomberg Tax invited me to update an earlier version of this portfolio, which was authored by Frank Latcham. Frank was one of the greats of state taxation, and was lead counsel for the taxpayer in Container Corporation. His unitary business portfolio served tax professionals for a generation.

Bloomberg Tax: Do you foresee any particular areas of development for the taxation of unitary businesses?

Fruchtman: Yes. I expect to see interesting developments in New York state and New York City, as case law under their 2015 revisions takes shape. Nationwide, I expect the states to explore methods for moving toward worldwide combined reporting without saying that they are doing so. (The use of “tax haven” labels is an example of this and is addressed in this new portfolio.) In the same direction, but for all taxes, I expect the states to greatly expand the effort educate and tax businesses based abroad.

Bloomberg Tax: Why was a new portfolio prepared rather than an update?

Fruchtman: Caution is required when updating a work written by someone of Frank’s caliber. When Bloomberg Tax and I looked closely at what was needed, it became clear that so much has changed that preparing a new portfolio would serve users best. We have, however, retained Frank’s materials where possible. This includes a number of historical discussions and his commentary relating to Container.

Bloomberg Tax: What is new about this portfolio?

Fruchtman: Most important, there is a greatly increased use of nationwide developments. California remains a giant in the area, but now many states have issued sophisticated unitary guidance, both administratively and in court decisions. This portfolio utilizes teachings from across the country.

Bloomberg Tax: Of course, new developments are always just around the corner. Will this ever be a “finished” product?

Fruchtman: Certainly not! In addition to Bloomberg Tax’s routine updating of the portfolio, I expect that every few years we will give it a thorough review.

Bloomberg Tax: Thank you for your time on this.

Fruchtman: It was a great experience. Thank you for the opportunity.

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