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A thorough discussion of the problems associated with MUCR can be found in the study prepared for COST by Ernst & Young LLP, “Understanding the Revenue and Competitive Effects of Mandatory Unitary Combined Reporting” (www.cost.org). 122 C Street, N.W., Suite 330 Washington, DC 20001-2109 Tel: 202/484-5222 Fax: 202/484-5229.
As with general combined group filings, worldwide combined groups need to combine all unitary entities in the combined group. All income and losses from those entities are included in the return to arrive at state taxable income.
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They were under enormous pressure by our trading partners, both in Europe and Asia. In 1984, President Ronald Reagan convened the Worldwide Unitary Taxation Working Group to study the issue. Treasury Secretary Donald Regan, who led the group, concluded that state tax policy should require water’s-edge unitary combination.
- 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...
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.
currently included in Virginia income tax filings using existing methods. The report is required to be submitted to the Department electronically on or before July 1, 2021, and no extensions may be granted.
Apr 26, 2017 · Although combined reporting for unitary business groups adds a layer of complexity to state income tax filings, combined filing does not necessarily mean that a taxpayer will owe more state tax. In some situations, it allows the losses of certain members to offset the profits of another.
