Indiana - Asset sale, land sale, and termination fee examined for business/nonbusiness and apportionment treatment

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A recent Supplemental Letter of Findings examined a taxpayer's income derived from an asset sale, a land sale, and a merger termination fee and concluded that:
  • The business income generated from the sale of a facility located outside of Indiana subject to an instalment sale contract was sourced outside of Indiana because the subject property was located outside of Indiana;
  • Two land parcels, previously treated as business property and included in the taxpayer's property factor, could not be converted into nonbusiness property simply because the adjoining facility was sold and the land was held as investment property and not immediately put to use in the taxpayer's business; and
  • The income from a merger termination fee was classified as business income because, under the functional test, compensation for effort and costs incurred during an acquisition was deemed to be essential and integral parts of the taxpayer's business operations.


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