Untitled Quiz

A traditional formula for apportioning income, combining sales, payroll, and property factors equally.

A method used to divide a business's income among different states where it operates to calculate the tax liability for each state.

A component of the apportionment formula, calculated by dividing sales within a state by total sales everywhere.

A factor in the apportionment formula, calculated by dividing compensation paid within a state by total compensation everywhere.

A part of the apportionment formula, the value of a business's real and tangible property in a state divided by the total value of property everywhere.

Income earned from the regular and usual activities of a taxpayer's business, including income from property if its acquisition, management, and disposition are integral to those activities.

Income that doesn't arise from the regular activities of a taxpayer's business.

Defines 'business income' as income arising from transactions in the regular course of a business and includes income from property if its acquisition, management, and disposition are integral to that business.

Defines 'non-business income' as all income other than business income, providing a broad definition.

States that essentially all income arising from conducting a trade or business is business income. Non-business income is considered an exception.

Specifies that gain or loss from the sale of property used in a unitary business is considered business income.

A business where different parts are considered interrelated and function as a single economic unit, often across multiple states.

Business transactions that are outside the usual course of a business, such as the sale of a subsidiary or significant asset disposal.

The location where a taxpayer's customer directly or indirectly receives value from a service. This is used to determine where sales are allocated for tax purposes.

Sales from services are allocated to California if the customer receives the benefit of the service in the state, determined by the customer's billing address or evidence the benefit was received in California for business customers.

In states with throwback rules, sales of tangible property that are not taxable in the destination state are allocated back to the originating state, even if the income wasn't earned there.

Throwback rules can increase the numerator of a state's sales factor, potentially leading to higher taxes for businesses even if they earned less income in that state.

If a taxpayer does not have nexus in the state where revenue should be allocated under market-based sourcing rules, those sales are excluded from the numerator and denominator of the sales factor.

For services delivered electronically, a taxpayer's market for service revenue can be determined by looking at the customers of their customer.

A landmark case demonstrating look-through rules, where the market for pharmaceutical benefit management services was determined not by the pharmacy, but the pharmacy's customers (the patients).

The remaining income after deducting all expenses from gross income.

This rule treats each member of a combined group as a separate entity for apportionment purposes. Only entities with stand-alone nexus have their sales included in the sales factor numerator.

This rule treats all members of a combined group as one entity for apportionment purposes. Sales from all members are included in the sales factor numerator, regardless of individual nexus.

A legal concept used to determine if a business's operations are sufficiently interconnected to justify combining their income and expenses for tax purposes.

A state can tax a 'fair share' of profits from activity within its borders using apportionment. This means dividing the profits earned from a business across different states based on factors like sales, payroll, and property.

Methods used to assess if businesses are part of a unitary group, based on factors like intercompany transactions, operational interdependence, and shared resources.

How individual states implement the unitary business concept into their tax laws and regulations.

The concept originated in property tax cases, recognizing the importance of considering a business's operations as a whole, rather than just its assets in a specific location.

The principle that states have the right to tax a business's profits based on its activity within their borders, but the apportionment method must be fair and not arbitrary.

This clause in the U.S. Constitution prevents states from placing undue burdens on interstate commerce through their tax rules.

This test helps determine if a state's tax on interstate commerce is constitutional. One prong is the 'fair apportionment' test, which ensures the state isn't taking more than its fair share of the business's income.

In a tax dispute, the party claiming that an apportionment formula is unfair has the responsibility to prove it.

If the standard apportionment method produces an unreasonable result, a taxpayer can request a different method to ensure a fair outcome.

A tax doctrine that requires transactions to have a real economic effect beyond tax benefits or a non-tax business purpose. It's used to prevent taxpayers from manipulating transactions just to get tax advantages.

A method of analyzing transactions to determine if they have sufficient substance, taking into account both the objective factors (the transaction itself) and the subjective factors (the taxpayer's intentions).

A principle that emphasizes the real economic nature of a transaction, rather than just its legal form. This helps prevent taxpayers from using complex structures to avoid taxes.

This doctrine focuses on the taxpayer's motives, asking whether the transaction serves a legitimate business purpose beyond just tax avoidance. It prevents taxpayers from using transactions purely for tax benefits.

A transaction that lacks economic substance and is designed solely for tax avoidance. These are typically disregarded for tax purposes.

This doctrine treats a series of closely related transactions as one larger transaction, preventing taxpayers from separating tax-motivated steps from legitimate steps to gain an advantage.

A two-part test for the Economic Substance Doctrine, where either a real economic effect beyond tax benefits or a non-tax business purpose is sufficient to satisfy the doctrine.

The various anti-abuse doctrines, such as Substance Over Form, Business Purpose, Sham Transaction, and Step Transaction, often overlap and can be applied together in specific cases.