On August 31, 2022, the California Office of Tax Appeals (“OTA”), in the Matter of the Appeal of B. Housman and B. Pena, held that an Australian software company holder, Housman, and his wife are California residents and Housman is entitled to a stepped-up basis as a result of a valid check-the-box election to be classified as a partnership for
An interview with BOE Executive Director Yvette M. Stowers
In his latest installment of Across State Lines for Tax Notes State, Eversheds Sutherland Senior Counsel Eric Coffill interviews the executive director of the California State Board of Equalization, Yvette M. Stowers.
Read the full article here.
State income taxation of nonresident equity-based compensation
The increase in people who work remotely means some financial planners may need to reassess clients’ income sources to avoid a tax surprise.
In his article for Journal of Financial Planning, Eversheds Sutherland Senior Counsel Eric Coffill examines key issues related to the state income taxation of nonresident equity-based compensation and how to avoid potential pitfalls.
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A bridge too far: Ohio Court of Common Pleas finds convenience rule unconstitutional
On September 26, 2022, the Ohio Court of Common Pleas in Morsy v. Dumas, held that Cleveland’s municipal income tax on remote workers was unconstitutional on an “as applied” basis. The taxpayer lived in Pennsylvania and was employed by a company located in Cleveland, Ohio.
Prior to the COVID-19 pandemic, Morsy would stay in Cleveland Monday through Friday returning home
Calif. Tax Board nonresident asset ruling raises new issues
Earlier this month, the California Franchise Tax Board released Legal Ruling 2022-02, regarding the sourcing of Internal Revenue Code Section 751(a) gain from the disposition of a nonresident individual’s partnership interest when the IRC Section 751 property is located in California.
In this article for Law360, Eversheds Sutherland Senior Counsel Eric Coffill discusses the nonresident asset ruling and its
California shapes precedent with Tax Board sourcing decision
Most decisions issued by the California Office of Tax Appeals involve small dollars, but these decisions can still shape precedent.
In this article for Bloomberg Tax, Eversheds Sutherland Senior Counsel Eric Coffill discusses Appeal of R. Sheward, which addresses the Franchise Tax Board’s legal authority to assess tax on unreported income based on an estimate of income and its unwillingness
California Court of Appeal rules shareholders’ flow-through S corporation intangible income is apportionable, not sourced to shareholders’ domiciles
The California Court of Appeal ruled that nonresident shareholders were subject to California tax on their pro rata shares of intangible income from an S corporation’s sale of shares in a subsidiary. This sale of intangibles (goodwill of a business) was sourced as business income apportioned at the S corporation level, not as intangible income to a nonresident under the
More tax increase proposals pending in California
It is still early in the 2022 session of the California Legislature, which reconvened on January 3, and goes on final recess on August 31. However, a number of proposals to increase taxes are already under consideration.
In his article for Financial Advisor Magazine, Eversheds Sutherland Senior Counsel Eric Coffill details current tax increase proposals to watch.
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Prepare for takeoff: Minnesota’s minimum fee is partially preempted by federal law prohibiting taxation of airline gross receipts
The Minnesota Tax Court ruled that the federal Anti-Head Tax Act (AHTA) preempts using Alaska Airlines’ gross receipts when calculating the Minnesota Franchise Tax Minimum Fee. The AHTA prohibits states from taxing gross receipts from air commerce or transportation. Minnesota’s Minimum Fee, imposed on taxpayers exercising a corporate franchise in the state, is calculated based on the taxpayer’s total Minnesota
North Carolina OAH finds statute denying franchise tax affiliates receivables deductions unconstitutional
The North Carolina Office of Administrative Hearings (OAH) recently found, following a summary judgment motion hearing, that limiting the franchise tax deduction to receivables from affiliates doing business in North Carolina violated the U.S. Constitution. The petitioner argued that limiting the deduction to North Carolina debtors discriminated against interstate commerce in violation of the dormant Commerce Clause of the U.C.