Tax Headlines

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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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New York ~ Sales and Use Taxes: Company’s Sales of Chocolate Taxable; Insufficient Information Available to Determine Nexus

A network marketing company’s sales of a chocolate product that is marketed as promoting a healthy weight and healthy lifestyle is considered a candy or confectionery product that is subject to New York sales or use tax when sold at retail. The taxpayer’s product is sweetened chocolate sold in wrapped pieces.

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All States ~ Personal Income Tax: House Passes Bill to Limit Taxation of Mobile Workers’ Income

The U.S. House of Representatives has passed the Mobile Workforce State Income Tax Simplification Act of 2012, which, if enacted, would prohibit an employee’s wages from being subject to personal income tax or withholding and reporting requirements in any state other than the employee’s state of residence and a state in which the employee is present and performing employment duties for more than 30 days during a calendar year. The Act would not apply to professional athletes, professional entertainers, or certain public figures. It would be effective January 1 of the second year after the date of enactment.

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All States ~ Corporate Income Tax: MTC Executive Committee Postpones Action on Multistate Compact UDITPA Revisions

On May 10, 2012, the Multistate Tax Commission’s Executive Committee voted to postpone further action on proceeding with the adoption of the amendments to Article IV of the Multistate Tax Compact that provide model corporate income tax allocation and apportionment provisions. Article IV currently incorporates almost verbatim the provisions of the Uniform Division of Income for Tax Purposes Act (UDITPA). The Executive Committee voted to postpone further action to provide additional time for member states to review the recommendations and provide additional comment and feedback.

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Corporation Entitled to Increased Basis to Reflect Tax-Exempt Usage of Aircraft; Airplane Not Divisible into Two Assets (CBS Corp., FedCl)

In a case of first impression, a corporation was entitled to the refund of taxes overpaid due to the erroneous determination of gain from the sale of two aircraft by its qualified foreign sales corporation (FSC) subsidiaries. The subsidiaries erroneously took into account the depreciation allocable to exempt foreign trade income while calculating the adjusted basis.

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Boehner Promises Pre-Election Vote on Bush Tax Cuts

House Speaker John Boehner, R-Ohio, promised on May 15 that the House will vote on an extension of the Bush-era tax cuts before the November elections. Speaking at the Peter G. Peterson Foundation’s 2012 Fiscal Summit, Boehner also said that tax reform legislation will soon be introduced that sets out a path for congressional action in 2013. Boehner’s comments are at odds with commonly held expectations that Congress would work on those issues during a lame-duck session.

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Arizona ~ Multiple Taxes: Capital Gains Tax Cut, NOL Carryover Increase, Bonus Depreciation, More Enacted

Arizona legislation has been enacted that provides an income tax subtraction for capital gains, expands the net operating loss (NOL) carryforward period for corporate income tax purposes, allows bonus depreciation for individual income tax purposes, enacts a new income tax credit, and revises other income and insurance premium tax credit provisions.

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