California, Indiana, South Carolina, Tennessee | KPMG | US

KPMG reports: California, Indiana, South Carolina, Tennessee

California, Indiana, South Carolina, Tennessee

KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments.

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  • California: A state appeals court affirmed a lower court decision concerning issues of unitary relationship and the characterization of a merger termination fee as business income. In this case, it was determined that a cable company (taxpayer) and a home-shopping channel subsidiary were not engaged in a unitary business, and that the merger termination fee received by the taxpayer constituted apportionable business income. 
  • Indiana: The Department of Revenue concluded that the taxpayer (a provider of direct mail services) was entitled to use a costs of performance methodology to source its service receipts, and noted the taxpayer’s detailed study provided sufficient information for the taxpayer to conclude that the majority of its direct costs were incurred in other states.
  • South Carolina: The Department of Revenue issued guidance (Rev. Proc. 2016-1) to outline a new optional, streamlined method of reporting federal changes and adjustments to South Carolina. 
  • Tennessee: Economic nexus standards apply for business tax—as well as for corporate income tax—purposes. Thus, businesses that lack a physical presence in Tennessee may nevertheless be subject to the state-level business tax.
  • Tennessee: The Department of Revenue, in addressing the excise and franchise tax filing consequences with respect to the conversion of corporations to “disregarded SMLLCs,” concluded that indirectly owned SMLLCs will have disregarded status.

 

Read more at KPMG's This Week in State Tax

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