IG_C24 - CHAPTER 24 MULTISTATE CORPORATE TAXATION LECTURE...

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CHAPTER 24 MULTISTATE CORPORATE TAXATION LECTURE NOTES OVERVIEW 1. Multistate taxation has taken a critical position in today’s tax practice. This is chiefly due to the magnitude of the dollars involved with the computations of the liability. With the variety of taxes and computations that face even a single taxpayer in an uneventful year, the size of the staff that most multistate corporations devote to the determination of state and local tax liabilities is substantial. 2. Equally important is the plethora of tax proposals offered by local politicians, often in the guise of economic development incentives. 3. There are analogies between multistate taxation and the taxation of international transactions. a. Most important differences between these taxes, though, lie in the sheer multitude of competing jurisdictions in the multistate setting, and in the absence of a comprehensive set of treaties to resolve some of the conflicts among those jurisdictions. b. UDITPA may be seen as a type of tax treaty, but only a handful of states follow the model act to the letter; most use it as a starting point, and make several important local modifications. Speculate as to the future of UDITPA as a truly comprehensive treaty. (1) Will such a development represent the Federalization of the state revenue codes, leading to the loss of local control over taxing policies? (2) Will there always be a “border incentive” to present potential business immigrants with a more favorable tax climate, thereby eroding the power of the cartel of states? 24-1
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24-2 2009 Comprehensive Volume/Instructor’s Guide with Lecture Notes (3) How can the act be updated to address the concerns of a service-based electronic economy? 4. When discussing multistate taxation, choose terms carefully. Use assign , rather than allocate or apportion , when speaking of generic partitioning of income among the states. Then, it is easier to make later business/nonbusiness, apportion/allocate distinctions. 5. Multistate tax planning does not consist of a review of a specific state’s tax provisions. Rather, the tax professional must become familiar with a number of states’ tax laws, and to become familiar with the overriding principles of multistate taxation, so that effective tax planning can take place. ETHICAL AND EQUITABLE CONSIDERATIONS Encouraging Economic Development through Tax Concessions (page 24-4) . Costs of new development should be shifted to the new residents, through impact fees, user fees, and higher property taxes. Developers may not be able to shift all of these costs to new homeowners and commercial operations. OVERVIEW OF CORPORATE STATE INCOME TAXATION Computing State Income Tax 6. Starting point in computing the state taxes for corporations is their Federal taxable income. a.
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This note was uploaded on 03/17/2009 for the course ACC 483 taught by Professor Susankuniyoshi during the Spring '08 term at University of Phoenix.

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IG_C24 - CHAPTER 24 MULTISTATE CORPORATE TAXATION LECTURE...

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