Tax Headlines

1827

Finance Panel Examines Efficacy of Renewable Energy Tax Incentives

The Senate Finance Subcommittee on Energy, Natural Resources, and Infrastructure on March 27 heard testimony on how recent and pending expirations of energy tax incentives affect deployment of renewable energy facilities, energy efficiency measures and advanced biofuels. Much of the focus was on the credit for wind energy, which expires at the end of 2012.

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New Hampshire ~ Miscellaneous Tax: Transfer of Ownership Interest to Single-Purpose Entity Not Taxable

The New Hampshire Supreme Court ruled that the transfer of an ownership interest in a real estate holding company to a single-purpose bankruptcy remote entity for the purpose of obtaining a mortgage loan was not subject to real estate transfer tax because it was not a contractual transfer within the meaning of the applicable statute. A contractual transfer is a bargained-for exchange of all transfers of real estate or an interest therein.

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Tax Court Lacked Jurisdiction to Review FPAA Issued to Interim Partnership (Rawls Trading, LP, TC)

Tax Court jurisdiction did not exist over an interim partnership proceeding involving an individual who pursued a tax shelter strategy with a tiered partnership structure, in which two lower level (“source”) partnerships engaged in activities designed to fabricate capital losses through overstatement of bases in partnership interests. These overstated bases flowed through to the higher level (“interim”) partnership, which owned the source partnerships, and then, through other pass-through entities, to the taxpayer.

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Senate Democrats Unveil Small Business Tax Breaks Bill

Senate Democrats on March 26 unveiled the Small Business Jobs and Tax Relief Bill of 2012, a package of tax breaks geared toward promoting small business growth. The measure includes a payroll tax incentive to create new jobs and an extension of the current 100-percent depreciation deduction for new equipment purchases.

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South Carolina ~ Sales and Use Tax: Software Delivered Electronically at Customer’s Location Not Taxable

The South Carolina Department of Revenue has issued a sales and use tax ruling clarifying that the sale of software delivered electronically via the Internet or wireless network from a connection between the seller’s laptop and the buyer’s computer at the buyer’s location is not taxable so long as no part of the software, such as back-up tapes, diskettes, or flash drives, is delivered by tangible means. Software delivered electronically does not fall within the definition of tangible personal property or within the scope of the statutory provisions taxing communications services. However, the department advises that charges by an application service provider (ASP) to a customer for access to software on its website are taxable.

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Mississippi ~ Miscellaneous Tax: Waste Management Assessment Upheld

A contractor was correctly assessed a Mississippi commercial nonhazardous solid waste management fee of $1.00 per ton because (1) the contractor’s work sites met the statutory definition of commercial nonhazardous solid waste management facilities; (2) the Mississippi Department of Revenue’s (formerly, the Mississippi State Tax Commission) treatment of similarly-situated waste management facilities was not unequal, and, therefore, the contractor’s constitutional rights were not violated; and (3) the evidence demonstrated that the contractor was the operator of the work sites and was liable for the entire assessment.

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Michigan ~ Corporate Income Tax: Taxpayer Not Unitary, Gain Excluded From SBT Base

Affirming the lower court, the Court of Appeals held that a taxpayer was not a unitary business with a joint venture that was sold; therefore, the capital gain on the sale was properly excluded from the taxpayer’s tax base under the former Michigan single business tax (SBT). The court noted that the unitary business principles applied to the former SBT because, like income taxes, the value added under a value-added tax (such as the SBT) often cannot be assigned to a single source. The court examined whether the taxpayer, through its ownership of the subsidiary, operated a unitary business with the subsidiary’s joint venture.

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CCH Weekly Report from Washington, D.C.

House Republicans released the GOP budget for fiscal year 2013, which calls for reforming the tax code and eliminating special interest loopholes, while simultaneously lowering tax rates and extending the Bush-era tax cuts. Legislation was also introduced to grant small businesses a 20-percent tax cut and eliminate subsidies for big oil companies. In addition, a Senate Finance subcommittee held a hearing on tax fraud through identity theft. The IRS, meanwhile, announced it will enter into voluntary closing agreements (VCAs) with issuers of qualified student loan bonds that were unable to establish which bond issues the student loans were properly allocable to as purpose investments and that, as a result, could not establish that the bond issues involved were not issues of arbitrage bonds.

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