Tax Headlines

1827

California ~ Multiple Taxes: Supermajority Constitutional Change Was Amendment, Not Revision

Pursuant to binding precedent from the California Supreme Court, voter enactment of Article XIII A in 1978, which in part (Sec. 3) required a supermajority of legislators to approve any state tax increase, was a constitutional amendment, not a constitutional revision. A taxpayer’s contention that the precedential case applied only to Secs. 1, 2, and 4 of the article was incorrect. Although the court discussed those sections in greater detail than Sec. 3, the court did not limit its holding to those sections and upheld Article XIII A in its entirety. This case related to the version of Sec. 3 prior to its 2010 amendment, which was not relevant to this case.

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California ~ Corporate Income Tax: Taxpayer May Utilize MTC’s Equally-Weighted Apportionment Formula

In a much-anticipated decision, a California court of appeal has held that California’s adoption of a double-weighted sales factor apportionment formula to apportion its taxable income for corporation franchise and income tax purposes did not override the Multistate Tax Compact’s (Compact) provision adopted by California that provides multistate taxpayers an option to utilize either the Compact’s equally-weighted three factor formula to apportion and allocate income for state income tax purposes or a signatory state’s alternative apportionment formula.

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Qui Tam Award Not Capital Gain; Relator’s Share Not Capital Asset (Alderson, CA-9)

In a case of first impression in the Ninth Circuit, the chief financial officer of a hospital organization was properly denied a tax refund generated by recharacterizing a False Claims Act qui tam award as capital gain. The qui tam award was not a capital asset because the individual did not hold a property interest in the information he provided to the government and there was no property that was sold or exchanged. Since the exchanged information related to his knowledge of his employer’s engagement in Medicare fraud, he did not possess an exclusive property right in the information or a legal right to exclude other individuals from possessing the information.

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Camp Introduces Bill to Extend Bush-Era Tax Cuts

House Ways and Means Committee Chairman Dave Camp, R-Mich., introduced legislation on July 24 that would temporarily extend the Bush-era tax cuts for one year and halt the alternative minimum tax (AMT) from affecting middle-class taxpayers for two years. The Job Protection and Recession Prevention Bill of 2012 (HR 8) is expected to reach a vote on the House floor before the August congressional recess.

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