Income Tax Archives

New Year, Same New York—Bill Proposes Significant Tax Increases for Corporations

January 13, 2025 By Maria Eberle, Lindsay LaCava and Nicole Ford 5 Mins Read

Starting the new year off with legislation aimed directly at the pockets of corporate taxpayers, New York has issued a legislative proposal to nearly cut in half corporate taxpayers’ available GILTI exemptions, and at the same time almost double the top corporate franchise tax rate. Senate Bill 953 (“SB953”), pre-filed in the state senate on January 8, 2025, has the potential to significantly increase New York franchise tax exposure for corporations doing business in the…

California Continues to Challenge Economic Substance and Business Purpose

October 8, 2024 By Trevor Mauck, Kent Strader and David Simon-Fajardo 3 Mins Read

In Matter of Gatewood Corp, OTA Case No. 19105425 (July 3, 2024), the California Office of Tax Appeals (“OTA”) concluded that Gatewood Corporation’s (“Gatewood”) transfer of stock did not entitle it to a $10 million deduction because the transaction lacked economic substance and was for the purpose of tax avoidance, resulting in $831,398 additional tax. The California Franchise Tax Board (“FTB”) conceded a $332,559 non-economic substance transaction (“NEST”) penalty that it had originally imposed. In…

Nebraska Supreme Court Affirms Denial of “Deemed Dividend” Deduction For IRC §965 Income

September 25, 2024 By Drew Hemmings and Leah Regan 4 Mins Read

The one-time IRC §965 income inclusion for untaxed foreign earnings generated by a controlled foreign corporation (“CFC”) is not eligible for deduction from Nebraska taxable income as a “deemed dividend” according to a recent Nebraska Supreme Court decision, Precision Castparts Corp. v Nebraska Dept. of Revenue, 317 Neb. 481 (2024). Precision Castparts Corp. (“Taxpayer”), an aerospace component manufacturer, sought a declaratory order from the Nebraska Department of Revenue (“Department”) authorizing the company to amend its…

Qualified New York Manufacturer Wins at New York Division of Tax Appeals: Use of Third-Party Subcontractor Did Not Affect Eligibility for State Franchise Tax Reduced Rate

June 17, 2024 By Maria Eberle, Lindsay LaCava, Mark Yopp and Rob Galloway 6 Mins Read

The New York Division of Tax Appeals recently ruled in favor of a taxpayer, E. & J. Gallo Winery, holding that it met the statutory requirements of a “Qualified New York Manufacturer” (“QNYM”) and was therefore entitled to a reduced corporation franchise tax rate. As a result of New York’s corporate tax reform, QNYMs are entitled to a reduced tax rate, including a 0% tax rate on their business income base beginning in 2014, for…