KPMG reports - Arizona (business income); Montana (property tax); New Jersey (capital improvement exemption); New York (click-through nexus); Ohio (overpayment notification); Texas (securities as inventory) 

December 9: KPMG’s This Week in State Tax—produced weekly by KPMG’s State and Local Tax practice—focuses on recent state and local tax developments and features a series of short podcasts presented by KPMG tax professionals. Text of the podcasts is also available.

This week’s edition includes the following topics (listen to the podcasts; to read text, click on the links below).


  • Arizona - The Arizona Court of Appeals in two separate cases held that the definition of “business income” consists of two independent tests—the “transactional” and the “functional” tests—and that the satisfaction of either test will result in a taxpayer’s income being characterized as business income.


  • Montana - Montana’s Supreme Court held the Department of Revenue could reclassify a cable company as a telecommunications services company and then tax the company’s property as that of a centrally assessed telecommunications services company for property tax purposes.


  • New Jersey - The New Jersey Superior Court, Appellate Division, affirmed a state tax court decision that services related to the installation of an inventory handling system were not exempt from sales tax as a capital improvement to real property.


  • New York - The U.S. Supreme Court declined to review two cases addressing the constitutionality of a click-through nexus statute.


  • Ohio - Proposed legislation (House Bill 365) would require the Ohio Tax Commissioner to notify taxpayers of overpayments of certain business taxes, including the financial institutions franchise tax, sales and use tax, the commercial activity tax, motor fuel tax, and individual (personal) income tax withholding.


  • Texas - Under Texas law, gross proceeds from the sale of loans or securities that are “treated as inventory of the seller for federal income tax purposes” are considered gross receipts for Texas sales factor purposes. The Comptroller issued a policy letter reminding taxpayers that each entity within the combined group must be examined individually to determine whether the entity is considered a dealer in securities held in inventory



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