Uniform Division of Income for Tax Purposes (UDIPTA): Business vs. Nonbusiness Income Tax

Training Provided by Lorman Education Services nWhile most U.S. states impose income tax on multistate business under the principles contained in the Uniform Division of Income for Tax Purposes Act, state courts and taxing authorities have interpreted that set of relatively uniform laws differently, especially with regard to the definition of business income. The differing interpretations of business income have increased significance to multistate businesses that are in the process of selling assets, liquidating or ceasing operations. This introductory teleconference details the mechanics of UDITPA and how that set of uniform laws requires allocation of nonbusiness income to a particular state and apportionment of business income among the states in which the business conducts activities. It also details, through existing and emerging case law, the narrow transactional test and the broad functional test, and the exceptions to those tests that courts have both found within UDITPA's definition of business income and used to determine whether revenue from certain asset sale transactions constitutes business or nonbusiness income.

Uniform Division of Income for Tax Purposes (UDIPTA): Business vs. Nonbusiness Income Tax Agenda

1. Why States Are Required to Apportion Income of a Multistate Business for State Income Tax Purposes
1. Constitutional Limitations on States' Power to Tax Multistate Businesses
2. The Uniform Division of Income for Tax Purposes Act
2. Why the Difference Between Business and Nonbusiness Income Matters - Allocation vs. Apportionment
1. Nonbusiness Income Allocated to Specific States According to Statute
2. Business Income Apportioned Among All States Using Formulary Apportionment
3. Defining Business Income - Uniform Language, Different Meanings
1. The UDITPA Definition: Is There One Test or Two?
2. The Transactional Test - Focus on the Transaction
3. The Functional Test - Focus on the Relationship of the Asset to the Business
4. State Legislative Adjustments From UDITPA's Definition of Business Income
4. The Liquidation Exception to the Functional Test
5. The Application of the Liquidation Exception When an Election Is Made Under Internal Revenue Code Section 338(h)(10) (Stock Sale Treated as Asset Sale)

About The Training Provider: Lorman Education Services

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