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Mandatory Uniform Combined Reporting |
The purpose of Combined Reporting is to measure the amount of economic activity and to assign economic value and ultimately income to multiple states of a combined entity taxpayer. Thus, where a single corporation does business within and without a state, the process of allocating and apportioning its income between the several states is ordinarily a relatively simple task under the Uniform Division of Income for Tax Purposes Act (UDITPA). However, a far greater level of complexity is involved in determining taxable income in a particular state when the corporation’s activities are part of a unitary business conducted by the corporation and related corporations in several states.
One methodology for addressing this situation is the “combined report” concept, which is currently adopted by more than half of the states which impose a tax on income. AdvanceCPA subscribers can find more details on combined reporting in the Tax Compliance and Reference database under SALT Alert: Mandatory Uniform Combined Reporting. |