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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Corporate Tax

Date & Time
  • event Date

    Thursday, February 27, 2025

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    110 minutes

Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

$247.00
CPE
ALL

This course will provide SALT tax advisers with a thorough and practical guide to distinguishing between business and nonbusiness income for purposes of determining multistate allocation vs. apportionment. The panel will discuss distinctions between business income which must be apportioned and allocable (nonbusiness) income, detail states that vary from general rules, and demonstrate various tests for distinguishing income.

Faculty

Stacey L. Roberts
State and Local Tax Director
TaxOps

Ms. Roberts has been making state and local tax (SALT) less taxing for thousands of businesses over the last 25 years. As a director of the SALTovation team at TaxOps, she guides dynamic businesses through compliance and strategic planning focused on minimizing risk and strengthening tax positions. Ms. Roberts honed her specialty at Andersen Worldwide/Andersen LLP, KPMG and Deloitte before moving in-house with a Fortune 500 company to administer state and local tax. She has also led the national SALT practice at a regional firm. Ms. Roberts is a member of the Colorado Legislative Task Force Concerning Tax Policy and a frequent speaker, instructor and author on SALT issues for industry and professional organizations.

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Michael J. Cataldo
Shareholder
Cataldo Tax Law, PC

Mr. Cataldo represents corporate and individual clients in state and local tax controversies across the country during audits, administrative appeals, litigation and settlement. He also provides state and local tax planning and transactional advice. His practice focuses primarily on state and local corporate income and franchise tax, sales and use tax, real property transfer tax, personal income tax and gross receipts tax imposed by jurisdictions throughout the country. He regularly represents and advises clients from a broad range of industries on issues such as nexus, apportionment, business/non-business income, unitary combined reporting, and the taxability and sourcing of transactions for sales and use taxes. 

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Description

To minimize their company's multistate tax liabilities, tax advisers and professionals should identify opportunities to allocate nonbusiness income to lower-tax jurisdictions rather than apportion income among the states in which the firm does business.

Many state statutes require companies to allocate nonbusiness income to the company's domicile. However, some states apply different definitions of nonbusiness income.

The definition of business income is generally based on two tests: the transactional test and the functional test. Business income includes revenue derived from the regular course of the taxpayer's trade or business and income from property integral to the taxpayer's regular business or trade. Nonbusiness income is generally all other income.

There is significant disagreement among taxpayers and state taxing authorities on what constitutes allocable income. Tax advisers must grasp and apply the relevant tests to avoid penalties and identify opportunities to mitigate state income tax.

Listen as our panel provides a thorough and practical guide to identifying allocable nonbusiness income for state income tax purposes.

Outline

  1. Allocation vs. apportionment principles
  2. Determining business income
    • Transactional test
    • Functional test
    • Multistate Tax Commission definition
    • Other tests and standards
  3. State tests
  4. Characterization of specific types of income
  5. Domicile questions

Benefits

The panel will discuss these and other issues:

  • Dividend, interest, capital gains, and royalty income as business vs. nonbusiness income
  • Income from partnership interests owned by a corporation
  • Classification of rents
  • State trends in following or deviating from UDITPA principles

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Recognize income scenarios that can be classified as nonbusiness and allocated rather than apportioned
  • Determine how to apply the transactional and the functional tests to determine whether income can be treated as nonbusiness
  • Identify which states follow MTC or other standards
  • Determine tax positions to allocate income as nonbusiness

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Knowledge and understanding of tax apportionment approaches involving multi-state companies; familiarity with income classification, sourcing and allocation methods.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.