Scenario: using apportionment factors to determine CNIT and foreign franchise tax liabilities

Jun 30, 2011
Q:

Considering each of the following situations independently, would Corporation X be entitled to utilize apportionment factors to determine its Corporate Net Income Tax and foreign franchise tax liabilities? In each case assume that Corporation X is subject to tax only in the indicated states:

1) Corporation X transacts business in Pennsylvania and Texas, where it is subject to the Texas Franchise (Margins) Tax.

2) Corporation X transacts business in Pennsylvania and Michigan, where it is subject to the Gross Receipts Tax element of the Michigan Business Tax but is exempt from the Business Income Tax element.

3) Corporation X transacts business in Pennsylvania and Ohio, where it is subject to the Commercial Activities Tax.

4) Corporation X transacts business in Pennsylvania and Nevada, which does not impose an income, privilege or shares tax. Under Pennsylvania nexus standards, Corporation X would be subject to a net income tax in Nevada if that state chose to impose such a tax.

5) Corporation X transacts business in Pennsylvania and Nevada, which does not impose an income, privilege or shares tax. Under Pennsylvania nexus standards, Corporation X would be subject to a privilege or shares tax in Nevada if that state chose to impose such a tax, but would not be subject to a net income tax under PL 86-272.

A:

All of the above examples Corporation X may apportion.

Pennsylvania CPA Journal

Read the latest from the Pennsylvania CPA Journal online or via the mobile app and digital edition.

Read More

CPA Now

Get the latest info on professional trends, management, and leadership skills on CPA Now.

Read More

PICPA 2019 Premier Sponsors

Platinum Sponsor

Gallagher Bollinger Logo CPACharge

Gold Sponsor

Paychex logo

Bronze Sponsor

payroc-logo-hi-res
Capstan Logo

Interested in becoming a sponsor? Contact Kelli Comegys for packages and opportunities.