Exam 24: Multistate Corporate Taxation

Typically exempt from the sales/use tax base is the purchase of tools by a manufacturer to make the widgets that it sells.

Typically, corporate income taxes constitute about 20 percent of a state's tax collections.

Identify some state/local income tax issues facing pass-through entities such as S corporations, partnerships, and LLCs.

Trayne Corporation's sales office and manufacturing plant are located in State X.Trayne also maintains a manufacturing plant and sales office in State W.For purposes of apportionment, X defines payroll as all compensation paid to employees, including elective contributions to § 401(k) deferred compensation plans.Under the statutes of W, neither compensation paid to officers nor contributions to § 401(k) plans are included in the payroll factor.Trayne incurred the following personnel costs. Trayne's payroll factor for State X is:

By making a water's edge election, the multinational taxpayer can limit the reach of unitary principles to the apportionment factors and income of its U.S.and E.U.affiliates.