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Apr 14, 2015 · One of the biggest questions that arise in the context of acquisitions is when the acquired and acquiring companies are permitted or required to file a unitary combined return....
broadened definition of unitary business in N.J.S.A. 54:10A-4(gg) of the . Corporation Business Tax Act, which was codified in P.L. 2023, c. 96. P.L. 2018, c. 48, as amended by P.L. 2018, c. 131, requires mandatory unitary combined reporting for privilege periods ending on and after July 31, 2019 (beginning on and after August 1, 2018, if
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For tax years beginning on or after January 1, 2011, a corporation or unincorporated business entity subject to tax and engaged in a unitary business with one or more corporations or unincorporated business entities subject to combination shall calculate its taxable net income derived from this unitary business as its share, attributable to the ...
- Unitary Group Opportunities
- Functional Integration
- Centralization of Management
- Economies of Scale
- Jurisdictional Inconsistency
- Sources
While combined reporting often limits potential opportunities for impacted businesses through the imposition of mandatory rules under separate reporting regimes, several opportunities may be available, including defining the unitary group subject to combination, as well as apportionment planning in the proper calculation of the sales factor. In mos...
The functional integration test looks to shared functions and refers to transfers between, or pooling among, business entities that significantly affect the operation of the business activities.5Generally, functional integration includes, but is not limited to, transfers or pooling with respect to the business’s products or services, technical info...
The centralized management test focuses on not the ability to control but the actual amount of common control exercised between business segments. Centralization of management exists when directors, officers, and/or other management employees jointly participate in the management decisions that affect the respective business activities and that may...
The economies of scale test focuses on whether there is any income earned as a result of shared functions, activities, or operations. Economies of scale refer to a relation among and between business activities resulting in a significant decrease in the average per-unit cost of operational or administrative functions due to the increase in operatio...
Currently, approximately 30 jurisdictions mandate unitary combined reporting for general corporations that are commonly owned or controlled. However, notwithstanding the constitutional tests discussed above, these states adopt varying statutory definitions of “unitary” for purposes of combined reporting. Even in cases where the definitions in diffe...
Butler Brothers v. McColgan, 315 U.S. 501 (1942); See also 17 Cal. 2d 664.Edison California Stores v. McColgan, 183 P.2d 16 (1947).Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 445 U.S. 425 (1980).Ibid.The use of mandatory unitary combined reporting has become increasingly popular among states in recent years, driven by state budgetary shortfalls and the perceived distortion of taxable income by multistate corporations filing separate company reports.
Yes, an entity meeting the ownership and unitary criteria is included in the combined group regardless of whether the entity has nexus in Texas. Does the no-tax-due threshold apply to the individual members of the combined group or the combined group as a whole?
for preparing a combined report, which a corporation is required to use in computing its California tax liability, when the corporate activities are part of a unitary business conducted by the corporation and its related corporations. A combined report is not equivalent to a consolidated return for federal purposes.
