multi_jurisdiction_notes - 1 TAX 6845 Tax Planning...

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1 TAX 6845 – Tax Planning & Consulting (November 16) Topic: Multi-jurisdictional tax issues updated: November 6, 2010 Multi-jurisdictional tax issues: From formation, businesses must deal with state income taxes and local taxes (e.g., property, sales and use), but as they grow they are faced with taxes in other jurisdictions. Often that is multiple taxes in other states and then taxes in other countries. For example, there are over 7,600 state, local, and city taxing jurisdictions in the United States alone (see Streamlined Sales and Use Tax handout to look at what is being done to “simplify” this problem). This is a look at some of those issues. I. Taxes in the state of Florida: A. Individual income tax – none. Florida is 1 of 7 states – Alaska, Nevada, South Dakota, Texas, Washington, and Wyoming – without an individual income tax (while New Hampshire only taxes portfolio income). B. Corporate income tax – the state taxes corporations at 5.5% with a $5,000 exemption (and a 3.3% AMT). Florida and 46 other states have a corporate income tax (the 4 states that don’t include Nevada, South Dakota, Washington, and Wyoming). The state honors a valid federal S election. The return (see F- 1120 on the web page) is due the first day of the fourth month following year end. The state tax year is the same as the federal tax year. The Florida state corporate income tax essentially “piggybacks” the Federal return. Florida taxable income = Federal taxable income (line xxx) +/– state adjustments. C. Gift tax – none. D. Estate tax – Florida statutes specify that the Florida estate tax is equal to the amount of the federal credit for state death taxes. As the credit was replaced by a deduction after 2004, the Florida estate tax has effectively been repealed. Effective July 1, 2007, Florida law no longer requires the estate of a decedent who died after December 31, 2004, to file a Florida estate tax return (Form F- 706) if a state death tax credit or a generation-skipping transfer credit is not allowed by the Internal Revenue Code. E. Sales and use tax – 6% state-wide tax plus a discretionary local tax in some areas (up to a maximum of +1.5%). For example Seminole County has an additional one-cent sales tax, while Orange County has an additional ½-cent sales tax. Sales tax originate in Florida; while use tax is due on purchases made out of state and brought into Florida within 6 months of the purchase date. Sales tax is added to the price of the taxable goods or service and collected from the purchaser at the time of sale. Each sale, admission charge, storage, or rental is taxable unless the transaction is exempt. Most food, medicine, real estate, services, and items purchased for resale are exempt from sales tax. Mail order & internet transactions may be taxable and short-term rentals (less than six
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2 months) are generally taxable. Transfers/transactions between related parties are generally taxable. Use tax
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This note was uploaded on 09/09/2011 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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multi_jurisdiction_notes - 1 TAX 6845 Tax Planning...

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