Tax Headlines

1827

Indiana ~ Corporate Income Tax: Consolidated Returns Not Allowed

A taxpayer, a corporation doing business in Indiana that filed a consolidated corporate income tax return on behalf of itself and two affiliated companies, was not allowed to file consolidated returns because the affiliated corporations lacked activities in Indiana. Further, the taxpayer was not allowed to claim a research expense credit because of lack of evidence.

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Maximum Mortgage Interest Deduction Halved for Married Taxpayer Who Filed Separate Return; Spouse’s Failure to Deduct Any Interest Irrelevant; Penalty Imposed (Bronstein, TC)

The mortgage interest deduction for a married taxpayer who filed a separate return was limited to the interest she paid on $500,000 of her home acquisition indebtedness, plus the interest she paid on $50,000 of her home equity indebtedness. Although the statute clearly provided that the regular $1 million acquisition and $100,000 home equity debt limits were halved for married-filing-separately returns, the taxpayer argued that this was only to prevent married taxpayers from exceeding those limits by filing separate returns. Since no other obligee on the mortgage claimed any mortgage interest deduction, she claimed that she should be subject to the same limit on qualified residence interest that applied to other returns. However, she presented no evidence to indicate that Congress intended to allow a married couple to apply the $1 million and $100,000 limits to their combined separate returns.

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Tax Cuts and Tax Reform on Ways and Means To-Do List, Camp Says

The House Ways and Means Committee’s agenda for the remainder of 2012 will be to work on tax reform, extension of the Bush-era tax cuts and passage of the expiring tax extenders, Chairman Dave Camp, R-Mich., said on May 17. Speaking at a legislative policy seminar on tax and budget issues held by Washington-based Federal Policy Group, Camp said tax reform will consist of collapsing the six individual tax rates to just two rates of 10 percent and 25 percent, eliminating the alternative minimum tax and instituting a worldwide system of taxation. “Moving to a territorial system, along with a lower corporate rate, is critical to ensuring that we are an attractive destination for other countries looking for new places to do business,” Camp said.

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Oklahoma ~ Sales and Use Tax: 2010 Amendment Requiring State Administration of Local Taxes Ruled Constitutional

The Oklahoma Supreme Court has found constitutional a 2010 statutory amendment that requires the governing bodies of incorporated cities and towns to contract with the Oklahoma Tax Commission (OTC) for the OTC to assess, collect, and enforce the sales and use taxes levied by these localities and to remit the taxes to the localities. The amendment was enacted to conform the state’s laws to the Streamlined Sales and Use Tax (SST) Agreement, of which Oklahoma is a full member. In 2011, the city of Tulsa filed the action against the state seeking a declaration that the statutory amendment is unconstitutional.

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Minnesota ~ Multiple Taxes: Exemptions for New Football Stadium Property and Building Materials Enacted

Minnesota Gov. Mark Dayton has signed financing legislation for a new National Football League stadium for Minnesota Vikings games and other activities that exempts stadium property from property tax, exempts stadium building materials and supplies from sales and use tax, and makes other changes. A click-through nexus provision passed by the Senate in another previously reported stadium financing bill, S.F. 2391 (TAXDAY, 2012/05/11, S.8), is not included in the bill.

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Illinois ~ Corporate Income Tax: Subsidiary Cash Sharing Was Horizontal Integration for Unitary Purposes

A parent corporation could not amend an Illinois corporate income tax return that listed all of its domestic subsidiaries as part of a unitary business group in order to report its packaging subsidiary as a separate entity, while keeping its filtration subsidiary as part of a unitary group. An administrative ruling by the Illinois Department of Revenue was affirmed.

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President Presses Congress to Act on Small Business Tax Credits

President Obama on May 16 urged lawmakers to enact legislation that would jump-start small business investment by passing legislation that allows a 10-percent income tax credit for firms that create new jobs or increase wages in 2012 and that extends 100-percent expensing in 2012 for all businesses. Republican leaders gave a polite, but cool response to the plan and, instead, urged adoption of the Small Business Tax Cut Bill (HR 9), a GOP measure that provides a 20-percent small business tax cut. The White House has issued a veto threat on that bill.

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