Bradley Partner Jimmy Long in Bloomberg BNA on Using Separate-Company Federal Income to Calculate Federal Deductions
State and Local Tax (SALT) attorney Jimmy Long was quoted in Bloomberg BNA on an Alabama Tax Tribunal ruling that determined that the Sherwin-Williams Co., an Ohio-based paint company with operations in Alabama, improperly used Alabama taxable income to calculate federal deductions on state tax returns. The decision is “a logical extension” of an earlier state tax judge ruling in GKN Westland Aerospace v. State of Alabama, explained Long, who helped represent GKN in the 2011 case.
“In GKN, the predecessor to the Tax Tribunal rejected the Department of Revenue's (DOR) argument that the federal consolidated group's net operating loss prevented the Alabama taxpayer from claiming a Section 199 deduction when the taxpayer had taxable income on a separate company basis,” Long said. Internal Revenue Code Section 199 covers the domestic activities production deduction that was also disputed in the Sherwin-Williams case. The tribunal found the DOR regulation to be consistent with GKN holding, although the regulation wasn't in effect during the tax years relevant to the GKN case, he said.
The complete article, “Base Corporation’s State Deduction on Federal Income: Judge,” appeared in Bloomberg BNA on December 9, 2016. (login required)