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KPMG reports: California (apportionment); New Jersey (GILTI and FDII); Utah (foreign tax credit)

KPMG reports: California, New Jersey, Utah

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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  • California: The Franchise Tax Board issued a chief counsel ruling concluding that gain recognized from an IRC section 338(g) election (the election to treat the purchase of the target corporation’s stock as a purchase of the target’s assets) must be reported by the target entity on its final return and apportioned to California using its own apportionment factors.
  • New Jersey: The Division of Taxation released a technical bulletin (TB-92 issued August 22, 2019), addressing New Jersey’s treatment of global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII). TB- 92 replaces prior state guidance and sets forth a substantially revised policy concerning the apportionment method for GILTI and FDII.
  • Utah: The state’s high court reviewed a constitutional challenge to Utah’s individual income tax structure, as it applies to foreign and interstate business income of S corporation shareholders. The taxpayers, residents of Utah, were shareholders in an S corporation that generated about 98% of its income from activities outside of Utah. The state’s individual income tax, as is typical with state income taxes on individuals, taxes residents on all income whether generated within Utah, another state, or a foreign country. Also, as is typical with state income taxes on individuals, Utah provides residents with a credit against their Utah tax for income taxes paid to other states, but not for taxes paid to foreign jurisdictions—and was therefore challenged by the taxpayers.


Read more at KPMG's This Week in State Tax

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