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Tax Management Portfolio Income Taxes: Consolidated Returns and Combined Reporting, No. 1130, compares state combined reports and state consolidated returns in detail and discusses the mechanics and implications of filing combined reports and the different types of state consolidated returns. At the state level, members of a multi-corporate ...
Sep 26, 2017 · The unitary state income tax is a means by which certain states regulate the collection of income in the form of taxes from companies that do interstate commerce or file consolidated tax returns. While the regulation and requirements vary greatly among states, some generalities may be used to explain the concept.
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Apr 14, 2015 · The unitary business principle originated in the United States in the 19th century with state property taxes and transcontinental railroad and express companies. The issue in those early cases was ...
Feb 24, 2017 · The most effective approach to combating corporate tax avoidance is combined reporting, a method of taxation currently employed in more than half of the states that tax corporate income. The two most recent states to enact combined reporting are Rhode Island in 2014 and Connecticut in 2015. In several states, including Connecticut, Illinois ...
- 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.Dec 8, 2010 · The Unitary Business Principle, Broadly One of the fundamental constitutional limitations on state corporate income taxation is that a state may not tax a corporation's income unless there is "some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax."
P.L. 2023, c.96, made a series of technical corrections, clarifications, and changes to the Corporation Business Tax Act (CBT). This Technical Bulletin explains the unitary business principle and the definition of unitary business for New Jersey Corporation Business Tax purposes. For periods ending on and after July 31, 2023 (highlighting added ...
