Allocation/Apportionment

Idaho’s Supreme Court Means Business, Handing Taxpayers a Win on Definition of “Business Income”

June 10, 2020 by Maria Eberle, Lindsay LaCava and Kelsey Muraoka 7 Mins Read

The Idaho Supreme Court recently affirmed a District Court’s judgment that the gain from the sale of a 78.54% membership interest in a limited liability company did not constitute “business income” under Idaho Code section 63-3027. In Noell Indus. Inc. v. Idaho State Tax Comm’n, Docket No. 46941 (Idaho 2020), the court determined that “this type of gain does not meet the definition of ‘business income’ under either the transactional test or functional test (including the unitary business test),” and was therefore not apportionable income.

Texas Court Delivers a Sirius Change to Sourcing Methodology for Services

May 20, 2020 by Stephen Long and Trevor Mauck 4 Mins Read

The Texas Court of Appeals recently issued a decision that applied market-based sourcing for services, despite the state’s statute that requires the sourcing of receipts to the location where the service is performed. In Hegar v. Sirius XM Radio Inc., No. 03-18-00573-CV (Tex. App. Austin, 2020), the court narrowly defined the scope of “performance” as the final act that gets the service to the customer, thereby ignoring all of the costs that went into the performance and production of the service up to that point. Such an application produces a result that equates to market-based sourcing.

US: SALT Webinar Series

April 28, 2020 by Maria Eberle, Lindsay LaCava and Michael Tedesco 1 Min Read

The Baker McKenzie State and Local Tax (SALT) Subpractice Group is presenting a series of short webinars to keep members of the SALT community abreast of recent developments in these less than certain times. We hope you will attend so we can stay connected as we address these issues together. The next session in the series, Apportionment Sourcing the Remix, will take place on Wednesday, April 29 at 1:00 pm ET. If you would like…

State and Local Tax Responses to COVID-19: Nexus and Apportionment Relief for Employers With Telecommuting Employees [Updated April 22, 2020]

April 22, 2020 by Bobby Albaral, Ted Bots, Scott Brandman, Maria Eberle, Lindsay LaCava, Stephen Long, David Pope, Mike Shaikh, Mark Yopp, Nicole Ford, Dmitrii Gabrielov, Rob Galloway, Drew Hemmings, Garrett Kinkelaar, Jimmy Lucas, Trevor Mauck, Kelsey Muraoka, Roman Patzner, Katherine Piazza and Michael Tedesco 5 Mins Read

Many employees continue to telecommute due to the COVID-19 outbreak. As discussed in our previous blog post on state tax nexus and apportionment issues, out-of-state employers may need to consider whether a telecommuting employee’s activities could create nexus, exceed Public Law 86-272 protections, or impact the employer’s state income tax apportionment factor (particularly in states with a payroll factor or a sales factor where receipts are sourced based on cost of performance).