Income Tax Apportionment

Author: Michael Bannasch

As companies continue to expand their geographical footprint through exploiting the national economy via sales on the Internet, hiring telecommuting employees, or actually opening new facilities, the need to properly divide their income tax base among the states in which they operate becomes even more crucial. While states are trending toward a single-factor sales apportionment, there are still things that need to be understood about three-factor apportionment, in addition to the many complexities of sourcing sales of services under both cost-of-performance and market-based rules. This webinar will help you make sure your state income tax returns are prepared correctly, and give you some planning ideas that could reduce state income taxes.

Publication Date: July 2020

Designed For
CPAs with clients selling to customers in more than just their state of commercial domicile.

Topics Covered

• Reasons for and history of apportionment
• Understanding your company's/client's business to ensure proper sales sourcing
• Sourcing of sales of services — Market”based vs. cost”of”performance
• Sourcing of sales of tangible personal property

Learning Objectives

• Identify and resolve complexities with sourcing sales of services
• Recognize how to properly prepare the apportionment calculations for multi-state income tax returns
• Describe how to proactively plan to impact sales apportionment to your benefit
• Identify which states uses a three-factor equally weighted apportionment formula
• Identify the steps in sourcing of services under the cost-of-performance approach
• Describe which type of rule is designed to avoid the ability for companies to have nowhere sales
• Recognize how many states have throwback

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None