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Apr 14, 2015 · The unitary business principle finds its roots in 19th-century property taxation, when the U.S. Supreme Court first observed that an integrated business should be taxed as one unit instead of...
Nov 11, 2010 · Two tax concepts that states may employ to increase their tax revenue and that trap unwary foreign entities are (1) unitary combined reporting and (2) economic nexus. Unitary combined reporting is a methodology for apportioning the business income of a corporation that is a member of a unitary business group.
More specifically, a unitary business group is two or more persons that satisfy both a control test and one of two relationship tests. MCL 206.611 (6). A unitary business group is a single taxpayer under the CIT and must file a combined return. MCL 206.611 (5), 206.691.
- Unitary Business Group
- Water’s Edge and Other Filing Elections
- Water’s-Edge Group Membership
- Calculation of Taxable Income
- Apportionment and Joyce-Finnigan Methodology
- Treatment of NOLS and Credits
- Future Considerations
A characteristic permeating each state’s reporting methodology is a broadly defined concept of the unitary business group. West Virginia defines a unitary business as a single economic enterprise made up of separate parts of a single business entity or of a commonly controlled group of business entities. They must be “sufficiently interdependent, i...
A West Virginia combined group is required to file on a water’s-edge basis, unless the group elects to file on a worldwide combined basis (WV Code §§11-2413f(a), (b)). The worldwide election must be made on a timely filed, original return by every member of the unitary business subject to tax (WV Code §11-24-13f(b) (1)). The election is binding and...
A West Virginia water’s-edge group consists of combined group members that: 1. Are incorporated or formed in the United States; 2. Have apportionment factors in the United States averaging 20% or more; 3. Are domestic international sales corporations, foreign sales corporations, or export trade corporations; 4. Are members not included in the first...
In West Virginia, each member is responsible for tax based on its taxable income or loss apportioned or allocated to West Virginia. This includes the member’s apportioned share of the combined group’s business income. A member’s net business income is determined by removing all but business income, expense, and loss from that member’s total income....
West Virginia combined group members must utilize a three-factor formula comprising property, payroll, and double-weighted sales. West Virginia has proposed that it will follow the Joyce approach beginning January 1, 2009 (Ap peal of Joyce, Inc., No. 66-SBE-070 (Cal. State Bd. of Equalization 11/23/66)). Under Joyce, the sales of members with their...
West Virginia allows an NOL carryover earned during a tax year in which the taxpayer filed a consolidated return to be applied as a deduction from taxable income of any member of the controlled group until it is used or expires. NOLs earned otherwise may only be applied to the member that generated the loss (WV Code §11-24-13c(b)(1)(G)). In general...
The next few months are likely to result in a number of refinements to the filing methodologies in West Virginia, Massachusetts, and Wisconsin as taxpayers submit the first combined filings. At the same time, states’ regulations are still being clarified and finalized, and potential technical corrections bills are being considered. One of the bigge...
‘Unitary business’ means, for privilege periods ending before July 31, 2023, a single economic enterprise that is made up either of separate parts of a single business entity or of a group of business entities under common ownership that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide ...
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Tax is calculated individually by each taxable member on its apportioned amount of the combined group’s net income and capital. This separately calculated tax is the basis for determining whether a company has a “tax liability” for purposes of the eligibility requirements under the R&D Exchange.
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What is a unitary group?
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When is Corporation business tax based on a combined unitary basis?
Under the laws governing the CAT, a unitary group is defined as a group of entities that form a unitary business enterprise in which members share or exchange value. A unitary group of entities is united by more than 50 percent common ownership. In addition, a unitary business enterprise exists if at least one of the following conditions is met:
