CALIFORNIA: HOW SHOULD YOU "SHAVE" (FILE YOUR 2012 INCOME TAX RETURN)? | AccountingWEB

CALIFORNIA: HOW SHOULD YOU "SHAVE" (FILE YOUR 2012 INCOME TAX RETURN)?

Have you or your client extended your California business income tax return?  

If so, perhaps you are contemplating whether to utilize the Multistate Tax Commission (MTC) apportionment method or simply use one of California's acceptable methods (double-weighted sales factor (DWSF) or single-sales factor (SSF)).  

If you are debating what to do, based on my review and discussion with other practitioners, it appears the general consensus is to file the original return using California's allowable apportionment methods (DWSF or SSF) prior to 2013.  Then file an amended return to utilize the MTC method.  The main reason for doing so if that California will disallow the MTC method if utilized and will issue an underpayment penalty notice.  
Obviously, each situation is different and you should consult a qualified state tax professional before deciding you your company or client should file.  The above is provided as general information.
CURRENT STATUS OF GILLETTE CASE
The California Franchise Tax Board (FTB) appealed to the California Supreme Court and the Court granted review on January 1, 2013.  The FTB filed an opening brief on April 17, 2013.  The Taxpayer reply brief was due by July 16, 2013.  Oral arguments are anticipated late 2013/early 2014.
For more background information on this issue, please check out my previous post.

This blog

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website: www.leveragestateandlocaltax.com

You can reach Brian at strahle@leveragesalt.com.

Connect with Brian on LinkedIn. Follow Brian on Twitter. Join the Leverage | SALT LinkedIn Group, connect and contribute with your colleagues!  

Because state and local taxes are deceptively simple and endlessly complicated.

More from this blog