Colorado Private Letter Ruling Apportions Gain on Sale of Business to Another State

Normally, the sale of a business interest commercially domiciled in Colorado is considered business income, and statutory apportionment rules apply. This would include the gain in the numerator of the apportionment ratio.  In a recent case, however, the business that was sold was a distinct operation with its own administration, manufacturing, and distribution departments outside the state. As such, the Dept. of Rev. determined that the gain on this sale should not be sourced to Colorado.

If you are looking to sell your business, contact an Eide Bailly SALT professional to make sure you remain in compliance throughout the transaction process.

Arkansas Denies Credit for Taxes Paid to Another State

The Arkansas Department of Finance and Administration recently assessed additional income tax on an individual as a result of a denied credit of taxes paid to another state. The taxpayer paid property taxes to another state and claimed them on Form AR1000TC which is used to report income tax paid to another state. The purpose of the form is to avoid double taxing the same income. An administrative court determined that property tax is not an income based tax, so the credit was properly disallowed.

For more information on income tax credits, contact your state and local tax professional.

Indiana Department of Revenue Assesses Additional Income Tax on Gambling Couple

An Indiana married couple was recently assessed additional tax when the Indiana Department of Revenue determined that they did not qualify as professional gamblers. The State’s assessment is a result of a Federal adjustment. Professional gamblers report their winnings, losses, and expenses on Schedule C, which typically results in a lower income tax liability. The IRS’s denial of the taxpayer’s protest of their categorization as casual gamblers was adopted by the State without further analysis.

For more information on this and other income taxation rules, contact your state and local tax professional.

Tax Trends Webinar Series 2018

It’s back! The Tax Trends Webinar Series is designed to offer free education and provide information on innovative strategies to save you time and money. Our webinars this year include topics such as state income tax compliance, sales tax considerations, economic nexus, and more. Click here to view all of our Tax Trends sessions and to register.

Is your lawn mower considered an alternative fuel motor vehicle?

The Oklahoma Tax Commission recently ruled that a lawn mowed with a “propane mower conversion” fails to qualify for an income tax credit for “clean burning motor vehicle fuel property.” On the other hand, Oklahomans with lawn tractors may be relieved that they won’t have to get license plates.

Oklahoma’s Alternative Fuel Vehicle Income Tax Credit provides a state income tax credit of 10% of the cost of a new “alternative fuel vehicle,” with a maximum credit of $1,500. The credit also can apply to the costs of converting a standard vehicle to burn alternative fuels, which include compressed or liquefied natural gas or liquefied petroleum gas.

Oklahoma isn’t the only state with special tax incentives for alternate fuel vehicles. Contact our State and Local Tax team if you think you might qualify.

Cite: LR 17-004

 

MN Income Tax Return – Federal Conformity

The Minnesota Department of Revenue (MN DOR) has started reviewing 2015 income tax returns for conformity with federal tax law. MN tax laws did not match the federal tax laws for the 2015 and 2016 calendar years. MN legislation in January, 2017 retroactively conformed MN tax law to federal tax law for 2015 and 2016. The MN DOR was able to correct the filing forms for the 2016 tax year based on the January, 2017 update of MN tax law prior to the filing of 2016 tax returns. As 2015 income tax returns are reviewed by MN DOR, the MN DOR will be contacting taxpayers directly with modifications, refunds or questions. Therefore, the MN DOR does not recommend filing amended returns for years 2015 or 2016, unless there is a reason other than the change in MN tax law. No additional tax will be owed to the MN DOR because of the conformity changes.

Review the MN Department of Revenue website related to federal conformity. Contact your Eide Bailly professional with questions or for additional information.