Bradley attorney Bruce Ely talked with Law360 on a Multistate Tax Commission (MTC) work group’s issue of how to source state income from partnerships and its consideration of a general rule where sourcing would be decided based on the activities of the partnership.
Helen Hecht, MTC’s counsel and a staff advisor to the work group, reported that the group was focused on a “default rule,” similar to that found in federal sourcing principles. Under the rule, income would be sourced to the state where the partnership has activities, and so an individual partner's share of that income would also be sourced to that state.
Ely explained that the work group’s plan is not that unusual. “A number of states, whether they call it that or not, employ a default rule,” Ely said. “Helen was doing her best to make a complicated issue as simple as possible.” Ely included that even longtime state tax professionals may not be familiar with the nuances of partnership law.
The full article, “MTC Group Floats Activities-Based Sourcing for Partnerships,” was published in Law360 on January 18, 2023. (login required)