KPMG reports: California, Indiana, New Jersey, Oregon

KPMG reports: California, Indiana, New Jersey, Oregon

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 - The Franchise Tax Board (FTB) issued guidance (Legal Ruling 2015-02) that addresses the treatment of transactions between interest-charged domestic international sales corporations (IC DISCs) and their owners when the owner is not included in the California combined report. In general, California does not conform to the federal income tax treatment of IC DISCs. The FTB reserves the right to re-allocate gross income and deductions among IC DISCs and their owners to properly reflect the economic substance of the transactions. If the IC DISC’s owner is another C corporation and the two entities are included on the same California combined return, there is no re-allocation needed because the income attributable to the IC DISC will offset the expense attributable to its owner. However, if the IC DISC’s owner is an individual, an entity other than a C corporation (e.g., a partnership), or a C corporation that is not included on the same California combined report as the IC DISC, then: (1) any sales attributed to the IC DISC will be attributed back to the owner; and (2) any commissions “paid” to the IC DISC by the owner will be ignored (i.e., the owner does not receive a deduction). Also, IC DISCs registered in California will still be subject to the California minimum franchise tax.
  • Indiana - The Indiana Tax Court granted partial summary judgment for the state revenue department, finding that use tax was owed on vehicles that never enter the state, but were registered in Indiana.
  • Oregon - Pending legislation (Senate Bill 61) has passed both houses of the Oregon legislature, and if enacted, would make changes to the list of tax haven jurisdictions and expand the scope of the tax haven provisions.

 

Read more at KPMG’s This Week in State Tax

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