Case Study in Distortion: Have the Rules Of Alternate Apportionment Changed in California?

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Alternative apportionment can be invoked in California when the inclusion of receipts from an activity qualitatively different from the taxpayer's principal business leads to substantial quantitative distortion. In its examination of the General Mills case, this article notes that the taxpayer was caused to use alternative apportionment because its hedging activities, while critical to the success of its primary business, were determined to be qualitatively different from the sale of consumer food products such that the quantitative distortion caused by the hedging activities did not fairly represent the extent of taxpayer's business in California.