Tax News

CCH (cch.taxgroup.com) reports:

  The Oklahoma Supreme Court has decided that the Oklahoma State Board of Equalization and the Oklahoma Tax Commission (hereinafter, the state revenue authorities) erroneously classified a natural gas gathering facility as a public service corporation and, accordingly, these state revenue authorities were without jurisdiction to assess the facility for purposes of Oklahoma ad valorem taxation. Instead, only the local county assessor had the jurisdiction to assess the facility's property. Furthermore, the court determined that a state statute relied upon by the state revenue authorities in taxing the facility was unconstitutional.

CCH (cch.taxgroup.com) reports:

  In an Idaho corporate income tax case involving loans that were secured by Idaho real property, the Tax Commission affirmed a deficiency notice, despite the taxpayer's claim that the transfer of the loans to related companies for securitization removed the loans from the Idaho apportionment numerators. The taxpayer argued that the loans should be excluded because the companies did not transact business in Idaho and, therefore, were not subject to Idaho income tax. In examining the safe harbor allowed for corporations conducting certain limited financial activities within Idaho, the Tax Commission noted that it is possible for a corporation to be maintaining an office in the state, based on activity being conducted on its behalf by affiliates or representatives, provided that such activity is more than just de minimis . In this case, the activities conducted at affiliated offices in Idaho exceeded the de minimis exception.

  In addition, with respect to the property factor, the Tax Commission concluded that the intercompany transfer of the loans to related companies did not amount to a material change that would justify excluding the loans from the Idaho numerator. The taxpayer's exclusion of the loan interest from the Idaho sales factor numerator was also rejected.

  The taxpayer also failed to establish that it should be allowed to change the assignment of certain other loans, based on a cost of performance analysis. In addition to solicitation occurring in Idaho, the loans in question were secured by Idaho real property, assigned to Idaho on regular business records, and assigned to Idaho in returns filed with other states.

  Finally, although the taxpayer's substantive arguments were rejected, the Tax Commission recognized that the underlying legal issues were complex. Because the taxpayer acted in good faith and there was reasonable cause for the positions taken, the substantial understatement penalty was waived.

Decision No. 20555 , June 24, 2008, received October 23, 2008, ¶400-594

  Other References:

  Explanations at ¶11-540

CCH (cch.taxgroup.com) reports:

  For purposes of determining percentage depletion under
Code Sec. 613A(c) for oil and gas produced from marginal properties, the IRS has released a table of the applicable percentages for marginal production that covers tax years beginning in calendar years 1991 through 2008. The applicable percentages are: 15 percent for calendar year 1991; 18 percent for calendar year 1992; 19 percent for calendar year 1993; 20 percent for calendar year 1994; 21 percent for calendar year 1995; 20 percent for calendar year 1996; 16 percent for calendar year 1997; 17 percent for calendar year 1998; 24 percent for calendar year 1999; 19 percent for calendar year 2000; and 15 percent for calendar years 2001 through 2008.

Notice 2008-89, 2008FED ¶46,636

Other References:

 
Code Sec. 613A

  CCH Reference - 2008FED ¶23,988.044

  CCH Reference - 2008FED ¶23,988.35

  Tax Research Consultant

  CCH Reference - TRC FARM: 15,216.05

CCH (cch.taxgroup.com) reports:

  The IRS has issued the inflation adjustment factor for use in determining the enhanced oil recovery credit under Code Sec. 43. The inflation adjustment factor for calendar year 2008 is 1.4666. Because the reference price as determined under Code Sec. 45K(d)(2)(C) for 2007 ($66.52) exceeds $28 multiplied by the inflation adjustment factor for 2007 by $25.45, the enhanced oil recovery credit for qualified costs paid or incurred in 2008 is phased out completely. The GNP implicit price deflator to be used for calendar year 2008 is 119.656.

Notice 2008-72, 2008FED ¶46,635

Other References:

 
Code Sec. 43

  CCH Reference - 2008FED ¶4387.021

  CCH Reference - 2008FED ¶4387.07

  CCH Reference - 2008FED ¶4387.30

  Tax Research Consultant

  CCH Reference - TRC BUSEXP: 54,302.05

  CCH Reference - TRC BUSEXP: 54,554.15

Tax Analysts report: