Massachusetts ~ Corporate Income Tax: High Court Vacates, Remands Decision on Assignment of Loans to Commercial Domicile

The U.S. Supreme Court vacated a Massachusetts Supreme Judicial Court judgment (TAXDAY, 2015/01/29, S.9) that had affirmed the Appellate Tax Board’s decision that a subsidiary was required to assign a securitized student loan portfolio that it held in Delaware statutory trusts to Massachusetts and, accordingly, to include the loans in the numerator of its property factor for purposes of determining its financial institution excise tax apportionment formula.

The U.S. Supreme Court remanded the case to the Massachusetts Supreme Judicial Court for further consideration in light of the Wynne decision. (TAXDAY, 2015/05/19, S.13)

In seeking review, the taxpayers had asked the high court to consider the following questions: (1) whether the court below acted in accordance with the U.S. Supreme Court’s precedents when it looked solely to the taxes actually paid by a taxpayer in determining that an apportionment formula was internally consistent; and (2) whether a factor that disregards the activities and entities actually involved in producing and collecting income and instead arbitrarily assigns income to the commercial domicile of an owner of the income-producing entities reflects a reasonable sense of how the income is generated.

First Marblehead Corp. v. Massachusetts Commissioner of Revenue, U.S. Supreme Court, Dkt. 14-1422, petition for certiorari granted, judgment vacated, and case remanded October 13, 2015



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