California apportionment rules | KPMG | GLOBAL

California Supreme Court reverses appellate court, apportionment case

Apportionment in California

The California Supreme Court held that several taxpayers could not elect to apportion their income to California using the allocation and apportionment provisions contained in the Multistate Tax Compact in lieu of the apportionment formula mandated under state law.


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The California high court, in a long-awaited decision, reversed the findings of an appellate court. Gillette Co. v. Franchise Tax Board, S206587 (Cal. December 31, 2015)

In the high court’s view, the Multistate Tax Compact is not a binding reciprocal agreement among states, and the legislature’s 1993 repeal of the election was effective even if California had not withdrawn from the Compact entirely.  The state’s high court also rejected the appellate court’s holding that California’s reenactment rule was “offended” when the legislature adopted a double-weighted sales apportionment formula in 1993 but did not repeal the Compact.  


Read a January 2016 report [PDF 116 KB] prepared by KPMG LLP: SALT Alert! 2016-01: California: State Supreme Court Reverses Appellate Court’s Ruling in Gillette 

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