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State & Local Tax news

July 2017

In This Issue:

 

Welcome to the July 2017 issue of the Aprio State & Local Tax (SALT) Newsletter.

With dozens of different taxes imposed by the 50 states (and thousands of local jurisdictions), we recognize how challenging it is to keep up with current issues and developments. This newsletter is designed to provide insights on developments in state and local taxes including new legislation, regulations, rulings and cases addressing issues such as corporate and personal income taxes, sales and use taxes, nexus, franchise/net worth taxes, etc.

This issue of the newsletter includes articles addressing (i) New Jersey's "unreasonable" exception to its intercompany expense addback rule, (ii) Virginia guidance explaining the state's new law creating nexus for sellers that contract with an in-state fulfillment company, (iii) an Iowa court case regarding the makeup of the state's consolidated return group and the income tax treatment of pushdown accounting, (iv) a California Supreme Court decision applying - for the first time - the state's real estate transfer tax to include transfers of equity interests in entities that own real property and (v) a Washington tax determination ruling that use tax is due on the purchase price for property negotiated in an arm's length transaction even if the buyer made a bad deal.

In case you missed prior issues of this newsletter, please click here

If you have any comments, questions or suggestions regarding current or future topics, or if you would like to learn more about Aprio's SALT Practice, please email us at [email protected]. Thank you.

Jeff Glickman
Jeff Glickman, J.D., LL.M.
Partner-in-Charge, State & Local Tax Practice
 
software royalties

New Jersey Rules that Intercompany Royalty Expense is Deductible

By Alissa Graffius, SALT senior associate

Payments under a software licensing agreement between the parent and its distribution subsidiary were ruled deductible under New Jersey's "unreasonable" exception to its add-back rule.

 
3rd party contractor

Contracting with Third-Party Fulfillment Center in Virginia Creates Nexus for Sales Tax

By Tina Chunn, SALT senior manager

Retailers that engage a third-party fulfillment center may need to register their businesses for sales tax in states where their fulfillment company has warehouse locations.

Iowa Rules that Parent is Not Includable in Consolidated Group and Subsidiaries Can't Deduct Interest

By Jess Johannesen, SALT manager

In a case highlighting the issues that often affect consolidated/affiliated groups, a state income tax inefficiency was created when a consolidated group was sold and the parent financed the former owner's stock redemption.

California sign

California Court Holds that Transfer of Interests in Entities Owning Real Property Can Result in Transfer Taxes

By Jeff Weinkle, SALT manager

In California, counties and cities may apply a transfer tax on a deed, instrument or writing by which a real property interest is transferred for consideration - including the transfer of an ownership interest in a legal entity that owns real property.

 
washington-ruling

Washington Rules that Dentist Owes Use Tax Based on Purchase Price, Not Value

By Jeff Glickman, SALT partner

In a recent Washington case, the taxpayer owed use tax based on the value he paid for the property; the fact that he made a "bad bargain" did not constitute grounds for reducing the use tax owed.

 

About Aprio's State and Local Tax Practice

Aprio's State and Local Tax (SALT) practice advises clients on the state and local tax implications of their business operations, allowing clients to strategically minimize their liabilities and risks. Our team has over 50 years of combined SALT experience working in industry, state departments of revenue, public accounting and private law practice. We specialize in all areas of SALT, including matters related to state tax nexus, corporate and personal income taxes, sales/use tax, franchise/net worth taxes, credits and incentives, and mergers and acquisitions. In addition, we represent clients in administrative matters before state revenue departments around the country, including audit defense and settlement negotiations, pursuing voluntary disclosure agreements and obtaining letter rulings.