Tax Headlines

1827

Washington ~ Multiple Taxes: Legislation Limits Financial Institution Mortgage Interest Deduction, Extends Food and Data Center Exemptions

Washington Gov. Chris Gregoire has signed legislation that limits the financial institution business and occupation (B&O) tax deduction for mortgage interest to community banks, extends B&O tax exemptions for manufacturing of certain foods, and modifies the B&O taxation of newspapers. In addition, the legislation extends the sales and use tax exemption for data centers, provides a tax exemption for craft distilleries, and modifies leasehold excise tax provisions.

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Oklahoma ~ Corporate Income Tax: Licensing Agreement Did Not Create Nexus

Payments a Vermont insurance company received from an Oklahoma taxpayer for intellectual property consisting of trademarks and operating practices did not create sufficient nexus to subject it to the Oregon corporation excise (income) tax, the Oklahoma Supreme Court has held. The insurance company was established under the laws of Vermont by an international restaurant corporation, to insure various risks of the corporation and its affiliates. In establishing the insurance company, the corporation transferred the intellectual property to the insurance company to meet the capitalization requirements of Vermont for an insurance business.

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Noncustodial Parent Entitled to Dependency Exemption and Child Tax Credit; Separation Agreement Served as Required Declaration (Scalone, TCS)

A noncustodial parent was entitled to the dependency exemption and child tax credit for his qualifying child. The separation agreement that he and his ex-wife signed served as the required declaration that conformed to the substance of Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents.

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Guidance on Low-Income Housing Qualified Contracts Finalized (T.D. 9587)

The IRS has finalized regulations that define the qualified contract formula used to compute the purchase price amount of a low-income housing building as the fair market value of the non-low-income portion of the building, plus the low-income portion of the building. The regulations are applicable to owner requests to housing credit agencies on or after May 2, 2012, to obtain a qualified contract for the acquisition of a low-income housing credit building.

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Vermont ~ Multiple Taxes: Bill Would Increase Minimum Corporate Tax, Update IRC Conformity, Modify Taxation of Remotely Accessed Software

The Vermont Senate has approved a modified version of the House’s bill that, if enacted, would update the state’s conformity with federal income tax laws for Vermont personal and corporate income tax purposes and increase the corporate income minimum tax for corporations with gross receipts in excess of $2 million (TAXDAY, 2012/04/02, S.14).

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Minnesota ~ Corporate Income Tax: Activities of Merchandisers Created Nexus

An out-of-state company that employed merchandisers in Minnesota was subject to state corporate franchise tax because the activities of the taxpayer went beyond the mere solicitation of orders within the meaning of P.L. 86-272. Merchandisers employed by the taxpayer, a company that distributed and sold wristwatches and jewelry to retail stores, generated and submitted weekly reports to their managers; completed and maintained detailed floor maps of each retailer’s watch department; and conducted training presentations and informational seminars for the retailers’ sales associates.

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Wages of Foreign Government Employee Subject to Tax; No Exemption Under Code or Treaty Applied (Harrison, TC)

A German citizen, who was employed by a German government office located in the United States, was a permanent resident of the United States and a resident alien for tax purposes. Therefore, in the absence of an exemption under either Code Sec. 893 or the North Atlantic Treaty Regarding the Status of Their Forces (NATO SOFA), her wages were subject to tax.

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New Jersey ~ Property Tax: Homestead Reimbursement Denied

The denial of an 85-year-old disabled taxpayer’s application for a New Jersey homestead property tax reimbursement for tax year 2010 was upheld because she did not pay her property taxes in full by June 1, 2011, as mandated by statute. The taxpayer acknowledged that the taxes on her property were not paid in full by the deadline but testified that due to a knee injury and rehabilitation, she was physically unable to pay her bills. According to the Director of the New Jersey Division of Taxation’s interpretation of the law, a taxpayer is not eligible for a homestead property tax reimbursement unless all taxes due for the relevant year are paid by June 1.

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Kentucky ~ Property Tax: Land Owned by Nonprofit Industrial Corporation Not Exempt

The Kentucky Supreme Court ruled that a 100-acre parcel owned by Prestonsburg Industrial Corporation (PIC) did not qualify for exemption from property taxes as property belonging to a purely public charity within the meaning of Kentucky Constitution §170. PIC was founded by a group of local businessmen, as a private nonprofit corporation, to attract business and industry to Prestonsburg for economic development.

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