The one unvarying constant of Tax Court is variety: even long-established principles solve new problems. March saw a new look at Work Opportunity Tax Credit (WOTC) and the Empowerment Zone Employment Credit (EZEC) and a first look at the BBA reset of the partnership-partner relationship. Bitcoin, specifically hard-forked coins, are in view. The usual suspects like discovery jousts, SOL, and equitable tolling continue to show up. Take a look.
State Tax Planning with the “80/20 Company” Exclusion
Ted Stotzer
Many multinational groups find that foreign-source dividends and other income earned by domestic affiliates are fully or partially subject to state income taxation, even where the federal system provides an exemption. This state-level “leakage” can be material – particularly in high-tax jurisdictions – and is often overlooked because the income appears sheltered at the federal level. For groups with predominantly foreign operations, a starting structure or a restructuring that causes one or more domestic affiliates to qualify as an “80/20 company” can substantially reduce or eliminate state taxation on that income.
