2008 CCH Comprehensive Topics IM Ch25

2008 CCH Comprehensive Topics IM Ch25 - 501 Chapter 25...

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501 Chapter 25 <<<<<<<<<<<<<<<< Multijurisdictional Taxation: International and State and Local Transactions ————————————————————— SUMMARY OF CHAPTER Chapter 25 is a survey of multijurisdictional taxation, providing an overview of both international taxation and state and local taxation (SALT). SALT is addressed in the first half of the chapter. International transactions are discussed in the second half. State and Local Taxation ¶25,015 Estate and Inheritance Taxes Most states impose an estate or inheritance tax, a tax on the property of a decedent, either in the form of a tax on the estate or the beneficiary of that property. State-resident-decedents are typically subject to the state tax on all property owned, within and without the state; while nonresident decedents are taxed, in most states, on real or tangible personal property located within a state. Another type of state transfer tax is infrequently levied on the donor of gift property. ¶25,025 Property Taxes Property taxes are levied on owners of real and personal tangible property, although a few states also impose this tax on intangibles. ¶25,035 Franchise Taxes Franchise taxes are imposed on the privilege to engage in certain activities such as medicine or building contracting. ¶25,045 Sales and Use Taxes (SUT) Sales and use taxes (SUT) are serious considerations for entities involved in the sale of goods. Sales and use taxes are imposed by most states on retail sales of tangible personal property. The retailer is the typical tax collector (and then remits to the state) for sales taxes. Use taxes are paid by consumers on out- of-state purchases. © 2007 CCH. All Rights Reserved. Chapter 25
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502 CCH Federal Taxation—Comprehensive Topics ¶25,061 State Income Tax Formula Federal income tax base + State adjustments (such as interest on state and local bonds) 1 State adjustments (such as interest on federal obligations) State income tax base 1 Allocable income (income specifically allocated to a single state) Total income eligible for apportionment × State apportionment percentage State apportioned income + Allocated income State income tax base × State's income tax rates Tentative state income tax 1 Tax credits State income tax liability ¶25,065 Nexus A state's power to impose taxes on a nonresident or require a nonresident to collect and remit taxes to the state is limited by the United States Constitution. The Due Process and Commerce clauses of the United States Constitution prohibit a state from taxing a nonresident unless the nonresident has sufficient connection to the state. The presence or activity required within a state before the state may tax a nonresident is referred to as ‘‘nexus.'' The Due Process Clause requires some ‘‘minimum connection'' between a state and the person, property, or transaction it seeks to tax. A state tax will not violate the Commerce Clause if it is applied to an activity with a substantial nexus with the taxing state.
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This note was uploaded on 10/23/2009 for the course ACCTG 16 taught by Professor Juliekim during the Summer '09 term at Santa Monica.

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2008 CCH Comprehensive Topics IM Ch25 - 501 Chapter 25...

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