Tax Headlines

1827

Texas ~ Insurance Tax: Guidance Issued Regarding Independently Procured Insurance

The Texas Comptroller has issued a new tax publication regarding changes to independently procured insurance that became effective July 21, 2011. The Nonadmitted and Reinsurance Reform Act (NRRA) passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Texas laws that relate to surplus lines and independently procured insurance were revised to comply with the provisions of the NRRA that became effective on July 21, 2011.

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Louisiana ~ Corporate Income, Franchise Taxes: House Passes Bill to Expand Single Sales Factor Apportionment

The Louisiana House of Representatives has passed a bill that, if enacted, would extend use of the single sales factor apportionment formula for corporate income and franchise tax purposes to certain qualified businesses. Currently, the single sales factor formula is only available if a business’s income is derived primarily from manufacturing or merchandising. If enacted, the bill would apply for all corporate income tax periods beginning after 2012, and for all corporation franchise tax periods beginning after 2013.

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West Virginia ~ Corporate Income Tax: Water’s-Edge Reporting Clarified

West Virginia has enacted legislation clarifying which entities are to be included in a water’s-edge group for purposes of corporate net income tax. A corporation organized outside the United States that is included in a water’s-edge combined group and has an item of income that is exempt from federal income tax pursuant to a qualified treaty is to be considered included in a combined group only with regard to any items of income that are not exempt, taking into account items of expense and apportionment factors associated with such items of nonexempt income.

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Colorado ~ Sales and Use Tax: Remote-Seller Reporting Requirements Unconstitutional

The U.S. District Court of District of Colorado has declared unconstitutional, and issued a permanent injunction against enforcement of, a statute and regulations that require an out-of-state seller not obligated to collect Colorado sales tax to notify its Colorado customers of their obligation to self-report and pay use tax; provide its Colorado customers with an annual report detailing the customer’s purchases from the seller in the previous year; and provide the Colorado Department of Revenue with an annual report that includes the name, address, and total amount of purchases of each of the seller’s Colorado customers.

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Discharge of Debt Resulted in Income to Debtor; Penalty Imposed (Zeluck, TCM)

An individual who signed a subscription note as part of an investment received income in the amount of the note when the debt became nongenuine and was thus discharged. The taxpayer invested, in the form of cash and a subscription note, in a partnership that became involved in an oil-drilling operation. The note, with similar notes from other investors, was used to secure a turnkey note from the partnership to a drilling company who would drill wells for the partnership, and the taxpayer assumed personal liability on that turnkey note to the extent of his liability on the original note. During the next year, the taxpayer made interest payments as required by the note. The partnership dissolved at the beginning of the third year and liquidated, paying a distribution to the taxpayer of his capital share. No attempt to collect on the note was made then or later, with respect to the taxpayer or any of the other investors.

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Grant of Easement Was Not Qualified Conservation Contribution; Not Perpetually Protected; Accuracy-Related Penalty Did Not Apply (Mitchell, TC)

The grant of a conservation easement failed to qualify for a charitable deduction because it did not meet all the requirements to be a qualified conservation contribution. For the grant to be a qualified conservation contribution, it had to have been made exclusively for conservation purposes. To be exclusively for conservation purposes, it had to be enforceable in perpetuity. If there was a mortgage on the property, the mortgagee had to subordinate his rights to the donee organization.

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Washington ~ Business and Occupation Tax: Imposition of Seattle B&O Tax on Auto Manufacturer’s Wholesale Sales to Dealerships Upheld

The federal Import-Export Clause did not prohibit the city of Seattle from imposing its business and occupation (B&O) tax on an automobile manufacturer’s wholesale sales of imported vehicles to dealerships in the city. The Washington Court of Appeals analyzed three factors under Import-Export Clause case law and determined first that the tax does not burden or interfere with federal government regulation or commerce.

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