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State corporate income taxation presents unique challenges for businesses operating across multiple jurisdictions The foundation of any combined reporting requirement is the determination of a “unitary business group.” a unitary business is defined as a single economic enterprise carried on by a set of affiliated corporations, regardless of their separate legal structures. The franchise tax board may deny any dividend elimination for the dividends described in this paragraph if the board determines that a transaction is entered into or structured with a principal purpose of evading the tax imposed by this part.
As used in this subsection, business loss means a negative business income taxable amount after allocation or apportionment. Such deduction may reduce the tax on the combined business income base to the higher of the tax on the combined capital base or the fixed dollar minimum amount that is attributable to the designated agent of the combined group. Whenever two or more corporations are engaged in a unitary business and required to file a combined report, the fraction comparison provided by this subsection (b) (2) shall be calculated by using the payroll factor, property factor and sales factor of the combined group of unitary corporations.
The foundation of this tax methodology rests on defining a “unitary business.” this definition is met when a group of legally separate corporations functions as a single, interdependent operation, evaluated based on three core criteria.
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