Tax News

CCH (cch.taxgroup.com) reports:

  Individual partners of a Missouri limited liability limited partnership that derives substantially all of its income through its ownership interest in a limited partnership will be allowed to claim the Missouri personal income tax credit for tax paid to another state for their proportionate shares of the Texas margin tax (TMT) and Michigan business tax (MBT) paid directly by the limited partnership.

  The Missouri Supreme Court has previously applied two tests, the "based on" test and the "object" test, to determine whether another state's tax is an income tax for which Missouri residents can take the credit for tax paid to another state. The "based on" test analyzes whether the tax was based on federal taxable income. The "object" test analyzes whether the object of the tax is that of an income tax, to compensate the state for benefits received, or that of a franchise tax, to pay for the privilege of doing business in the state.