KPMG reports - Alabama (sales tax); Arizona (deemed asset sale); California (like-kind exchanges); Indiana (related-party payments); Pennsylvania (radiology services) 

August 12: 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.

Today’s edition, for August 12, 2013, includes the following topics (listen to the podcasts; to read text, click on the links below).


  • Alabama - An Alabama Administrative Law Judge concluded that (1) a taxpayer's use of certain forest equipment from its inventory, on a related entity’s timberland, was subject to sales tax under the “withdrawal provision,” and (2) the taxpayer was deemed to be reselling filters under service agreements which, thus, were not subject to sales tax.


  • Arizona - A Department of Revenue hearing officer ruled that gross receipts from the taxpayer’s stock sale—treated as a deemed sale of assets, including goodwill—are excluded entirely from the taxpayer's sales factor.


  • California - Recently enacted legislation (Assembly Bill 92) imposes new information reporting requirements for individual and corporate taxpayers that defer gain or loss under IRC section 1031 “like-kind” exchanges when California property is exchanged for out-of-state property.


  • Indiana - The Department of Revenue, in a “letter of findings,” determined that a deduction for residual profits paid to an affiliated management company was properly disallowed and not supported by the taxpayer’s transfer pricing study made for federal tax purposes.


  • Pennsylvania - A Pennsylvania commonwealth court affirmed an administrative decision denying a sales tax refund under the “manufacturing exclusion” on a taxpayer's purchases of magnetic resonance imaging (MRI) and computed tomography (CT) machines, related software, and electricity to power the machines. The process of saving images to a hard drive or other media was not "manufacturing," and because the taxpayer was providing a professional service, it must pay sales tax on its equipment purchases.



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