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KPMG reports: Missouri, Montana, San Francisco, Texas

Missouri, Montana, San Francisco, Texas

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.

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  • Missouri: The governor signed into law legislation (Senate Bill 87) that includes various tax changes, including measures decoupling Missouri from the federal limitations on the deductibility of interest expense under IRC section 163(j). Specifically, for all tax years beginning on or after January 1, 2018, interest expenses paid or accrued in the current tax year, but not allowed as a deduction for federal tax purposes, will be subtracted from a taxpayer's federal adjusted gross income in computing Missouri adjusted gross income.
  • Montana: The state’s high court concluded that a taxpayer—a combined group—was entitled to deduct 100% of the dividends received from 80/20 subsidiaries that were excluded from the group’s water’s-edge combined report. The 80/20 companies were domestic entities that had less than 20% of their property and payroll in the United States. For the tax years at issue, the taxpayer excluded 80% of the after-tax net income of the 80/20 companies and 100% of the dividends actually received from the 80/20 companies. 
  • San Francisco: A California superior court judge concluded that two ballot initiatives that raised taxes in San Francisco did not need to be approved by a super-majority of votes. In 2018, San Francisco voters approved two different versions of a ballot initiative for imposing an additional gross receipts tax on persons, entities, or combined groups that are engaged in business in the city and have over $50 million of gross annual receipts sourced to San Francisco.
  • Texas: The Comptroller filed amendments to a regulation concerning the franchise tax, and specifically concerning the definition of when a taxable entity is considered “primarily engaged in a retail or wholesale trade.” Under Texas law, taxable entities that are primarily engaged in retailing or wholesaling activities are subject to a reduced franchise tax rate.


Read more at KPMG's This Week in State Tax

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