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State corporate income taxation presents unique challenges for businesses operating across multiple jurisdictions In this article, the first in a series on combined reporting, the authors discuss the rules courts have used for finding a unitary business and offer strategies for taxpayers that may or may not want to establish a unitary business for tax purposes. Addressed the theoretical underpinning of the unitary business principle and discussed the application of the unitary business principle in both unitary and separate company states and key u.s
Supreme court decisions concerning the unitary business principle. Three states (california, illinois and new mexico) recognize that instant unity is possible provided that the indicia of a unitary business are present. Some states use separate company rules, and others use combined reporting for taxes
The unitary business principle helps decide which companies or parts of companies are included when.
Under this test, if the operation of a portion of the business done within the state depends on or contributes to the operation of the business outside the state, the operations are unitary. In legal terms, a business is considered unitary if its operations within a state are dependent on or contribute to its operations outside that state The term unitary business is often used in tax law, particularly in discussions about corporate taxation and apportionment of income across states.
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