Source: https://www.thetaxadviser.com/issues/2008/apr/currentcorporateincometaxdevelopmentspartii.html
Timestamp: 2019-04-18 12:34:25+00:00

Document:
By Karen J. Boucher, CPA; Shona Ponda, J.D.
Illinois and Virginia passed laws requiring flowthrough entities to withhold on the income of nonresident owners.
Several states passed laws regarding the disclosure of reportable transactions and/or penalties for noncompliance with disclosure requirements.
New York reduced its Article 9-A and Article 32 corporate tax rates for tax years beginning after 2006.
Michigan replaced the Single Business Tax with the Michigan Business Tax.
During 2007, numerous state statutes were added, deleted, or modified; court cases were decided; regulations were proposed, issued, and modified; and bulletins and rulings were issued, released, and withdrawn. Part I of this article, in the March 2008 issue, focused on nexus, Sec. 338(h)(10) transactions, allocable/apportionable income, and tax base. Part II, below, covers some of the more important developments in apportionment formulas, unitary groups/filing methods, administration, flowthrough entities, and other significant corporate state tax issues.
A multistate corporation’s business income is apportioned among the states using an apportionment percentage for each state having jurisdiction to tax the corporation. To determine the apportionment percentage, a ratio is established for each of the factors included in the state’s formula. Each ratio is calculated by comparing the corporation’s level of a specific activity in the state to the total corporation activity of that type everywhere; the ratios are then summed, weighted (if required), and averaged to determine the corporation’s apportionment percentage for the state. The apportionment percentage is then multiplied by total corporation business income.
While apportionment formulas vary, many states use a three-factor formula that includes sales, payroll, and property factors. Because use of a higher-weighted sales factor generally provides tax relief for in-state corporations, most states accord more weight to the sales factor than to the other factors. Changes in the apportionment formula may also be used to provide relief or tax benefits to specific industries or to properly reflect the operations of a particular industry. Recent apportionment developments are summarized below.
On remand from the California Supreme Court, a California court of appeal further remanded the General Motors 2 case (involving whether California should include the entire gross proceeds generated by certain treasury activities in its state franchise tax sales factor) back to the trial court for further proceedings consistent with the California Supreme Court’s decision in Microsoft Corp.3 Because neither the trial court nor the court of appeal had previous occasion to address the California Franchise Tax Board’s (FTB) alternative apportionment formula arguments, the California Supreme Court had remanded the case for further proceedings to allow the FTB to make its case.
In another development, the FTB amended Regulation §25137-14, which details rules related to the apportionment of income earned by mutual fund service providers. The amended regulation generally sources receipts based on shareholder residency and includes a throwback sales rule that incorporates the Finnigan 12 rule.
In a Chief Counsel ruling,13 the FTB determined that the investment activities of third-party investors that managed investments on behalf of a corporate taxpayer under written agreement did not constitute an “income-producing activity” for purposes of computing the taxpayer’s corporate income tax apportionment formula sales factor because state regulations specify that activities performed “on behalf of” a taxpayer by independent contractors do not result in income-producing activities attributable to the taxpayer.
The State Tax Commission (STC) denied a retailer’s use of an alternative apportionment method on its state combined return that would have included a unitary financial affiliate’s intercompany interest income in the denominator of the sales factor and its intangible assets (such as commercial paper) in the denominator of the property factor.14 The STC explained that the retailer failed to show that the standard apportionment formula resulted in sufficient distortion of its in-state business activity and that “advocating a better method than the standard formula” is not enough to satisfy this requirement. The STC also held that because the retailer failed to show where the costs of performance associated with gains from the sale of its credit card business had occurred, the income was excluded from its sales factor numerator and denominator.
SB 1544 and 783, Laws 2007, source sales of services and certain financial services based on market (rather than costs of performance); change the apportionment for transportation services to a ratio of Illinois gross receipts to gross receipts everywhere; and change the sourcing of telecommunications services and investment income of financial institutions.
SB 240, Laws 2007, allows single sales factor apportionment for qualifying manufacturers that construct a new facility in Kansas costing at least $100 million, employ at least 100 new employees at the new facility by December 31, 2009, and pay “higher-than-average” wages.
Effective for tax years beginning after 2006, Ch. 240 (LD 499), Laws 2007, adopts a single sales factor apportionment formula (prior to this law change, the apportionment formula for corporate income tax purposes was a three-factor double-weighted sales apportionment formula) and generally adopts a market-sourcing approach for sales other than sales of tangible personal property.
AB 4310C, Laws 2007, accelerated the phase-in of the single sales factor for Article 9-A taxpayers to tax years after 2006.
On remand from the Oregon Supreme Court, the Oregon Tax Court held that while a subsequently promulgated rule permitting an alternative discretionary apportionment formula applied retroactively to the years at issue, the DOR could not require a unitary financial organization to deviate from the standard apportionment formula and include intangible personal property in its property factor computation.18 The Tax Court explained that the rule does not allow the DOR, on audit, to initiate and require adjustments to taxpayer returns filed in accordance with an existing substantive rule.
In another development, for tax years beginning after 2006, SB 179, Laws 2007, requires insurance companies to use single sales factor apportionment, rather than the previous three-factor apportionment formula, and authorizes insurers to petition for and the department to permit or require alternative apportionment if the existing formula does not produce fair and equitable apportionment (Or. Rev. Stat. §317.660).
In addition, several rules were amended or added during the year. Oregon Administrative Rule 150-314.665(2) was amended to provide that for sales factor purposes, “tangible personal property” means personal property that can be “seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses” and includes electricity, water, gas, steam, and prewritten computer software. New Administrative Rule 150-314.665(3) explains that the sale of customized software produced for a specific customer is considered to be the sale of a service and sourced based on greater cost of performance. Amended Administrative Rule 150-314.665(4) explains that intangible personal property is sourced to Oregon if the property is used in a business activity in Oregon.
H 5300Aaa, Laws 2007, adopted a throwback provision for sales of tangible personal property (RI Gen. Laws §44-11-14).
Act 110 (SB 91), Laws 2007, allows businesses dealing in tangible personal property to use the single factor apportionment method on a phased-in tax savings basis for tax years beginning in 2007–2010 and lists items that constitute sales or gross receipts for purposes of computing the sales factor. Receipts from the sale of intangible property that are unable to be attributed to any particular state are excluded from the numerator and denominator of the sales factor (SC Code §12-6-2250).
The Arizona Tax Court ruled that a trademark subsidiary be included in the printing company’s combined return because its only assets were under exclusive license to the company and therefore were incorporated indivisibly into the printing products.22 However, the company could exclude its accounts receivable and investment subsidiaries from the combined return because they provided management services to the company that were deemed equivalent to services available on the open market and were therefore ascertainable using generally ac-cepted accounting principles.
Regulation §25110(d)(2)(F) reflects the FTB’s view that certain types of “not effectively connected income” must be excluded from U.S. source income for water’s-edge purposes because including such income would be inconsistent with the legislative history of the underlying state statutes. It also explains how expenses related to effectively connected income must be determined.
Amended Tax Commission Administrative Rule 35.01.01.600 requires insurance companies that are members of a unitary group to be included in the state combined income tax return.
The DOR required23 a taxpayer that filed combined financial institutions’ tax returns to include two nonresident investment management subsidiaries and their respective incomes in its return because under facts stated in the taxpayer’s SEC Form 10-K, the subsidiaries were part of the taxpayer’s unitary business.
In another finding, the DOR ruled24 that a retailer with numerous subsidiaries successfully showed that, although its affiliates were engaged in a unitary relationship, the in-state affiliates could continue to file separate company adjusted gross income tax returns because the group conducted all of its business at arm’s length.
SB 2, Laws 2007, requires corporations that are members of a corporate group to file an information statement providing detailed information about their operations and the difference between their current Maryland tax liability and the liability that would result if Maryland had adopted a combined reporting filing method. These reports are to be filed annually for all tax years begin-ning after December 31, 2005; the first report will be due by July 1, 2008.
For Article 9-A purposes, AB 4310C, Laws 2007, requires combined reporting for tax years beginning after 2006 for Article 9-A taxpayers for any commonly owned corporations engaged in substantial intercorporate transactions, regardless of whether those transactions are priced at arm’s length. It generally requires real estate investment trusts (REITs) substantially owned by Article 9-A corporations to file combined returns with their owners. TSB-M-07(6)C (6/25/07) provides the department’s interpretation of this new law.
In contrast, in another decision, the Tax Appeals Tribunal upheld26 an ALJ’s decision that the state could not force combined reporting with the taxpayer’s marketing company on the grounds that the taxpayer successfully rebutted the presumption of distortion by showing that the intercompany transactions were priced at arm’s length under the standards provided by Sec. 482.
In a different decision, the New York Tax Appeals Tribunal affirmed27 that it was inappropriate to make a discretionary adjustment to an Article 32 banking corporation’s combined income by including the income earned and reported from its Article 9-A investment subsidiary.
A North Carolina superior court held28 that a taxpayer was required to file its North Carolina corporate income tax return on a combined basis because its use of a complex REIT strategy that shifted profits earned in North Carolina and reduced its state corporate income tax liability had no real economic substance.
Amended Oregon Administrative Rule 150-317.705(3)(a) explains that while the presence of all three factors of unity (centralized management, economies of scale, and functional integration) demonstrates that a single trade or business exists, the presence of one or two of these factors may also demonstrate the flow of value requisite for a single trade or business. Subsequently, SB 178, Laws 2007, changed the definition of “unitary business” to having any one of the three factors of unity.
In Technical Bulletin TB-36 (3/16/07), the Vermont Department of Taxes provided basic information about how transactions between members of a unitary combined group are to be treated for purposes of determining the taxable business income of the unitary combined group and the Vermont apportionment percentage of the unitary combined group.
The Department of Taxation (DOT) held29 that an out-of-state intangible holding company (IHC) had to file a state consolidated return with its in-state parent company to avoid distortion resulting from the parent’s interest expense on intercompany loans with the IHC.
SB 749, Laws 2007, requires unitary businesses to file combined returns for tax years beginning after 2008 and permits the department to include the income and associated apportionment factors of any persons that are not included in a filed combined report but are members of the unitary business, to properly reflect the apportionment of income of the entire unitary business.
The DOR ruled30 that a limited liability company (LLC) treated as a partnership and owned by individuals or entities in a multitiered partnership structure can file one Alabama aggregate composite return on behalf of all its nonresident owners, including corporations and flowthrough entities as well as upper-tier owner individuals and entities.
The FTB explained31 that regardless of where an LLC’s trade or business is primarily conducted, it is considered to be doing business in California if any of its members, managers, or other agents conduct business in California on behalf of the LLC.
The FTB also explained32 that for California purposes, a series (division) within a Delaware Series LLC will be considered a separate business entity if (1) the holders of interests in that series are limited to the assets of that series upon redemption, liquidation, or termination and may share in the income of only that series; and (2) under state law, the payment of the expenses, charges, and liabilities of that series is limited to assets of that series. Each series that is a separate business entity and registered or doing business in California must file its own California tax return and pay the annual tax; it may also be subject to a fee based on total annual income.
In another development, AB 198, Laws 2007, provides that for tax years beginning after 2006, the LLC fee will be based on income sourced to California, and, if the fee related to years before 2007 is finally adjudged as discriminatory or unfairly apportioned, the fee of a disfavored tax-payer will be recomputed only to the extent necessary to remedy the discrimination or unfair apportionment not otherwise relieved by existing law.
In a case involving a corporate member, the SBE held33 that a corporation that sold its interest in an LLC must include its proportionate share of the LLC’s apportionment factors in its combined report, even though the LLC’s tax year end did not occur on the sale date, because state regulation requires such inclusion for LLCs treated as partnerships for federal income tax purposes and provides at least two options to determine the LLC’s apportionment factors, including interim closing of the partnership’s books or proration.
The U.S. Supreme Court denied review of whether the District’s unincorporated business (UB) tax was validly levied upon the nonresident members of real estate partnerships conducting business within the District to the extent that it imposed a tax on the net income distributed directly to the nonresident individuals. During 2006, the District of Columbia Court of Appeals held34 that the UB tax could be imposed on four real estate partnerships conducting business within the District, of which four non-residents were members.
Effective January 1, 2008, SB 500, Laws 2007, requires all partnerships and S corporations to file a composite tax return on behalf of all nonresident individual partners, regardless of whether the nonresident individual partner has other Indiana source income.
Ruling in favor of the taxpayer, the DOR agreed35 that a multistate taxpayer filing a combined state adjusted gross income tax return must include income from its four unitary partnerships in its sales factor denominator. The taxpayer was also allowed to eliminate intercompany sales from its sales factor.
SB 1544, Laws 2007, requires some flowthrough entities to withhold on the distributable income of nonresident owners. However, SB 783, Laws 2007, permits nonresident owners to file a certificate to exempt a flow-through entity from the withholding requirement, if the owners agree to file all required returns and timely pay taxes and to be subject to personal jurisdiction in Illinois.
Amended Rule 61.1.1401 changes partnership withholding requirements to prevent a partner that is a partnership itself from being included on a composite return. Such partners must separately file state returns and report all Louisiana source income, including income from the partnership, in their separate returns.
Amended Rule No. 805 (18-125 ME Code R. 805) establishes procedures for filing state composite income tax returns by partnerships, estates, trusts, and S corporations on behalf of partners, beneficiaries, or shareholders. Generally, a tiered partnership may file a single composite return on behalf of the nonresident partners of a tiered partnership group if each partnership and nonresident partner or shareholder is otherwise eligible to participate in the filing of a composite return.
The Appellate Tax Board ruled37 that an out-of-state taxpayer’s distributive share of income from a Massachusetts limited partnership was subject to apportionment rather than 100% allocable to Massachusetts.
The DOR ruled38 that an LLC treated as a partnership for federal income tax purposes that became owned by a multitiered partnership structure could file a state composite return on behalf of its nonresident partner individuals, partnerships, S corporations, C corporations, estates, and trusts, as long as these nonresident and upper-tier partners were not otherwise required to file a Missouri state income tax return. To the extent any such partners are required to file a Missouri state income tax return in their own right, they must do so and must be excluded from the LLC’s composite return.
Amended regulations clarify39 that the general statutory requirement for a foreign corporation that does business in the state to obtain a certificate of authority and file an annual report with the Division of Revenue is separate from, and independent of, the requirement for such taxpayers to file a state tax return or pay a tax to New Jersey. The amendments also set out the procedure for obtaining New Jersey S corporation status for a foreign corporation that is not required to obtain a certificate of authority to transact business within the state but that is subject to the state corporation business tax.
The New York Department of Taxation and Finance explained40 the revised regulations relating to the computation of the Article 9-A tax for corporate partners effective for tax years beginning after 2006.
In another development, the New York Department of Taxation and Finance explained41 that due to an expiring state tax law, for tax years beginning after December 31, 2006, single-member LLCs that are disregarded entities for federal income tax purposes no longer have to file the annual state fee payment form (Form IT-204-LL, Limited Liability Company/Limited Liability Partnership Filing Fee Payment Form) or pay the $100 filing fee.
A city tribunal affirmed42 that a corporation must look through a partnership to value its share of a partnership’s assets (aggregate approach) rather than to its investment in the partnership interest (entity approach).
In Final Decision No. 2007-28 (9/14/07), the DOR ruled that an out-of-state holding company that invests in various partnerships that lease automobiles and other equipment was required to include its pro-rata share of an in-state LLC’s apportionment data in its North Carolina corporate income tax apportionment calculation because the income from its investment in the LLC (which was treated as a partnership for federal tax purposes) constituted apportionable business income subject to the state’s corporate income tax.
Responding to the Tennessee Court of Appeals decision in Hilloak Realty Co.,43 which held that a limited partnership could add back certain unused federal depreciation in calculating its gain on the sale of real property, SB 2223, Laws 2007, eliminated certain adjustments to a taxpayer’s basis in depreciable property for state excise tax purposes.
The DOR explained46 that beginning with tax year 2006, estates and trusts (including grantor trusts) are no longer eligible to participate in composite returns.
In another development, 2007 Act 20 provides that retroactive to tax years beginning after 2005, a nonresident’s share of distributable income from a passthrough entity is not subject to withholding if the nonresident files an affidavit with the DOR agreeing to file a Wisconsin income tax return.
For the purpose of adjusting Arizona gross income due to changes in federal taxable income, SB 1233, Laws 2007, defines “final determination” as the point at which both parties have exhausted their appeal rights relative to the tax year in question and stipulates that a partial agreement, closing agreements, jeopardy, or advance payment assessment are part of the final determination and must be submitted to the DOR.
HB 1484, Laws 2007, extends to 90 days the period within which a taxpayer must report changes in federal taxable income (prior law required taxpayers to report within 30 days).
In another development, the Arkansas Supreme Court held47 that redacted legal opinions can be disclosed in response to a Freedom of Information Act request.
The FTB explained48 how taxpayers should file protective refund claims relating to pending court cases challenging a state law preventing filing refund claims to contest an amnesty penalty (on other than computational errors).
In another development, SB 788, Laws 2007, permits the FTB to conduct audits of annual water’s-edge returns on a discretionary basis. Prior law required the FTB to examine the annual filings of taxpayers that made water’s-edge elections for any potential noncompliance and, if noncompliance was found, to conduct a detailed examination of those filings, regardless of the net revenue benefit to the state.
HB 316, Laws 2007, withdraws the state’s consent to suit in matters related to changing the filing method from single to unitary relating to tax years ending prior to December 31, 1995, made by amended return or other method after December 22, 1994 (which is the date of the GTE 49 decision), and to prohibit the withdrawal of money from the state treasury to pay any such refunds.
The Maryland Court of Special Ap-peals affirmed50 that a closing agreement between a taxpayer and the IRS, providing that a portion of income was exempt from federal tax, was binding on the comptroller for Maryland tax purposes.
The Michigan Court of Appeals held51 that the Department of Treasury is not limited to issuing only one assessment to a taxpayer for the same tax period when the taxpayer fails to file the requisite returns.
SB 242, Laws 2007, revamped the appeals process for resolving tax disputes and made procedural changes to how taxpayers may request use of an alternative apportionment method for corporate income tax purposes.
The Oklahoma Attorney General found52 that (1) the Oklahoma Tax Commission has the authority to analyze a corporation’s structure to determine whether the taxable income reported (and thus the amount of Oklahoma corporate income tax owed) by a corporation is accurate and proper; (2) the commission has the authority to make adjustments between two or more taxpayers owned or controlled directly or indirectly by the same interests when it “reasonably determines such allocation is necessary to prevent evasion of taxes or to clearly reflect income of the organizations, trades or businesses”; and (3) what constitutes a proper adjustment by the commission is a question of fact and cannot be answered by an Attorney General Opinion.
The DOR explained54 that its voluntary compliance program applies to taxpayers that have nexus but are not registered to collect or remit applicable taxes due. The program generally requires a three-year lookback and interest; however, most penalties are waived.
Caution: Taxpayers must preserve their right to take this credit on or before May 15, 2008.
The New York Department of Taxation and Finance explained58 an alternative method for members of a federal consolidated return that have to file state income tax returns with federal tax shelter disclosure statements attached to fulfill their requirement and discussed59 amendments to procedural regulations relating to New York reportable transactions.
In another development, AB 4310C, Laws 2007, extended the existing tax shelter reporting, penalty, and disclosure rules for two years through June 30, 2009. The New York Department of Taxation and Finance explained this law change in TSB-M-07(7)C (6/28/07).
SB 39, Laws 2007, requires taxpayers to disclose their participation in reportable transactions60 and provides for a 60% listed transaction understatement penalty and an extended nine-year statute of limitations for deficiencies relating to listed transactions.
The STC adopted rules R865-6F-37 and R865-9I-53, providing guidance on how reportable transactions should be disclosed by taxpayers and material advisers.
HB 2920, Laws 2007, extends the statute of limitation from three to six years if a taxpayer knowingly fails to disclose on his or her state income tax return a transaction identified by the tax commissioner as an abusive tax avoidance transaction and requires the commissioner to publish a list of such transactions.
HB 2989, Laws 2007, provides that for an obligation to exist for “material advisor” disclosure or list maintenance after January 1, 2007, there no longer has to be a showing that the adviser made (or caused another to make) a false or fraudulent statement.
SB 40, Laws 2007, requires taxpayers to disclose their participation in federal reportable transactions; creates “material advisor” disclosure and list maintenance requirements and related penalties; imposes penalties on persons promoting abusive tax shelters; imposes related penalties for nondisclosure; and includes a voluntary compliance program that runs from January 1, 2008, to May 31, 2008, applicable to qualified taxpayers who participated in tax avoidance transactions.
Ch. 240 (LD 499), Laws 2007, subjects certain captive insurance companies to the state corporate income tax (rather than the premiums tax).
Ch. 3 (SB 2), Laws 2007, increased the corporate income tax rate from 7% to 8.25% for all tax years beginning after December 31, 2007.
SB 94, Laws 2007, replaced the Single Business Tax with the Michigan Business Tax (MBT). Details on the new tax can be found in the December 2007 issue of The Tax Adviser.61 Subsequent legislation, HB 5104, Laws 2007, amended the MBT to provide for a new deduction beginning in the 2015 tax year that is intended to offset the financial statement expense associated with establishing deferred tax liabilities resulting from the FAS 109, Accounting for Income Taxes, income tax treatment of the MBT.
For tax years beginning after 2006, AB 4310C, Laws 2007, reduced the Article 9-A and Article 32 corporate tax rates from 7.5% to 7.1% and the Article 9-A minimum tax rate from 2.5% to 1.5%. The corporate tax rate of “qualified New York manufacturers” was reduced to 6.5%.
In another development, the New York Tax Appeals Tribunal agreed62 with the taxpayer that the loss on the sale of a subsidiary was attributable to a reduction in business capital rather than subsidiary capital from an investment in a subsidiary.
HB 2707c, Laws 2007, suspended the corporate kicker credit for 2007.
HB 3928, Laws 2007, reduced the ownership percentage for inclusion in the unitary return from 80% or more to greater than 50%; expanded the definition of “lending institution”; provided that for apportionment purposes, if a loan or security is treated as inventory for federal tax purposes, the gross proceeds of the sales are considered gross receipts; required the preparation of a Finnigan report; and provided that a new taxable entity ceasing to do business in Texas during the period July 1, 2007–December 31, 2007, must file a final report and pay margin tax for the portion of the 2007 calendar year that it was doing business.
For tax years beginning after 2006, SB 2005, Laws 2007, reduced the corporate tax rate from 9% to 8.75%. SB 2004, Laws 2007, reduced the business franchise tax rate from 0.7% to 0.55%.
Authors’ note: This article is written in general terms and is not intended to be a substitute for specific advice regarding tax, legal, accounting, investment planning, or other matters. While all reasonable care has been taken in the preparation of this outline, Deloitte Tax LLP accepts no responsibility for any errors it may contain, whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person or entity that relies on it.
1 AZ DOR, Corp. Tax Rul. CTR 07-1 (4/3/07).
2 General Motors Corp. v. California Franchise Tax Bd., B165665, 2007 Cal. App. Unpub. LEXIS 669 (Cal. Ct. App. 1/29/07).
3 Microsoft Corp. v. California Franchise Tax Bd., 39 Cal4th 750 (Cal. 2006).
4 Square D Co. v. California Franchise Tax Bd.,CGC 05-442465 (Cal. Super. Ct., San Francisco Co. 4/11/07).
5 The Limited Stores, Inc. v. California Franchise Tax Bd.,152 CalApp4th 1491 (Cal. Ct. App. 6/8/07).
6 General Mills, Inc. v. California Franchise Tax Bd.,No. 439929(Cal. Super. Ct., San Francisco Co. 9/26/07).
7 California Franchise Tax Board, Tax News (December 2007).
8 General Motors Corp. v. California Franchise Tax Bd.,39 Cal4th 773 (Cal. 2006).
9 Microsoft Corp. v. California Franchise Tax Bd.,39 Cal4th 750 (Cal. 2006).
10 KS DOR Final Written Determination, WFD-P-2007-1 (1/8/07).
11 Appeal of Alaska Airlines, Inc., Cal. SBE Letter Decision No. 342596 (3/1/07).
12 Appeal of Finnigan Corp., 88-SBE-022 (8/25/88). The Finnigan rule says that in computing the numerator of the sales factor, P.L. 86-272 must be applied on a unitary-business-group basis.
13 CA FTB Chief Counsel Rul. No. 2007-2 (6/4/07).
14 ID State Tax Comm’n Rulings Nos. 18719 and 19549 (4/20/07).
15 Welch Packaging Group Inc. v. Department, Cause No. 49T10-0503-TA-21 (Ind. T.C. 11/13/07).
16 Fluor Enters., Inc. v. Department, 730 NW2d 722 (Mich. 2007).
17 In re Disney Enters., Inc., 830 NYS2d 614 (N.Y. App. Div. 2007).
18 U.S. Bancorp v. Department, 2007 Ore. Tax LEXIS 41 (Or. T.C. 3/13/07).
19 FedEx Ground Package Sys., Inc. v. Commonwealth, 922 A2d 978 (Pa. Commw. Ct. 2007).
20 Rules 34 TX Admin. Code §3.549(e)(5), (e)(38) and 34 TX Admin. Code §3.557(e)(5), (e)(33)(D).
21 Comptroller v. Home Interiors & Gifts, Inc., motion for rehearing denied, Dkt. No. 05-0939 (Tex. 6/1/07); Home Interiors & Gifts, Inc. v. Comptroller,175 SW3d 856 (Tex. Ct. App. 2005).
22 RR Donnelley and Sons Co. v. Department, No. TX 2005-050288 (Ariz. T.C. 6/29/07).
23 IN DOR, Ltr. of Finding No. 05-0500 (11/29/06).
24 IN DOR, Ltr. of Finding No. 05-0519 (11/16/06).
25 In re The Talbots, Inc., DTA No. 820168 (N.Y. Div. of Tax App., Admin. Law Div. 3/22/07).
26 In re Hallmark Mktg. Corp.,DTA No. 819956(N.Y. Tax App. Trib. 7/19/07).
27 In re Premier Nat’l Bancorp, Inc., DTA No. 819746 (N.Y. Tax App. Trib. 8/2/07).
28 Wal-Mart East Stores, Inc. v. Hinton,06-CVS-3928 (N.C. Super. Ct., 12/31/07).
29 VA Pub. Doc. No. 07-174 (11/14/07).
30 AL DOR, Rev. Rul. No. 07-001 (10/15/07).
31 CA FTB Publication 3556, Tax Information for LLCs (rev. March 2007).
32 CA FTB Publication 689, Don’t Gamble with Your Taxes: Incorporating in Nevada (rev. February 2007).
33 Appeal of Eli Lilly & Co., CA SBE Summary Decision No. 330522 (2/1/07).
34 Bender v. District of Columbia, 906 A2d 277 (D.C. 2006), cert. denied, S. Ct. Dkt. 06-719 (U.S. 2/20/07).
35 IN DOR, Supplemental Ltr. of Finding No. 02-0518 (11/1/06).
36 IL DOR, Publication 129, Pass-Through Entity Income (January 2007).
37 Sasol N. Am. v. Commissioner,Dkt. No. C273084 (Mass. App. Tax Bd. 9/5/07).
38 MO DOR, Ltr. Ruling No. LR 4110 (10/1/07).
39 NJ Admin. Code §§18:7–20.1 and 20.2 (2007).
40 NYS Dep’t of Tax’n and Fin., TSB-M-07(2)C, (1)I [Amendments to the Business Corporation Franchise Tax Regulations Relating to the Taxation of Corporate Partners] (1/17/07).
41 NYS Dep’t of Tax’n and Fin., Important Notice N-07-23 (November 2007).
42 In re National Bulk Carriers, Inc.,TAT (E) 04-33 (GC) (N.Y.C. Tax App. Trib. 11/30/07).
43 Hilloak Realty Co. v. Commissioner, No. E2006-00213-COA-R3-CV (Tenn. Ct. App. 3/29/07).
44 TX Comptroller, Tax Policy News (December 2007).
45 VA Pub. Doc. No. 07-150 (9/21/07).
46 WI DOR, News: New Requirements for Composite Returns (2/20/07).
47 Ryan & Co. AR, Inc. v. Weiss,No. 06-1266 (Ark. 9/27/07).
48 CA FTB Public Service Bulletin, Protective Claims—Amnesty Penalty (5/22/07).
49 GTE v. Revenue Cabinet,889 SW2d 788 (Ky. 1994).
50 Comptroller v. Colonial Farm Credit, ACA,918 A2d 514 (Md. Ct. Spec. App. 2007).
51 Tyson Foods, Inc. v. Department, No. 272929 (Mich. Ct. App. 9/20/07).
52 OK Office of the Attorney General, Opinion No. 07-25 (8/28/07).
53 2006 Act 119 (SB 993).
54 SC DOR, Rev. Proc. No. 07-1 (12/14/07).
56 TX Comptroller, Tax Policy News (August 2007).
57 TX Comptroller, Tax Policy News (September 2007).
58 NYS Dep’t of Tax’n and Fin., TSB-M-07(1)C [Additional Supplement to the Disclosure of Certain Transactions and Related Information Regarding Tax Shelters] (1/11/07).
59 NYS Dep’t of Tax’n and Fin., TSB-M-07(4)C and (4)I [Amendments to the Procedural Regulations Relating to New York Reportable Transactions] (3/8/07).
60 Such disclosure was contingent on the DOR adopting enabling rules, which it adopted under OAR 150-314.308.
61 Wright, “Michigan Business Tax: Overview and Issues to Consider,” 38 The Tax Adviser (December 2007): 750.
62 In re Bausch & Lomb, Inc., DTA No. 819883 (N.Y. Tax App. Trib. 12/20/07).

References: §25137
 §317
 §44
 §12
 §25110
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 §3
 §3
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.