Missouri - Intercompany dividends excluded from sales factor denominator because of unfair apportionment

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In a case of first impression, the Missouri Administrative Hearing Commission reviewed whether intercompany dividends could be included in a taxpayer's sales factor. The Commission found that: (1) with no indicia of sales, dividends were not included in the sales factor as an "intercompany sale;" (2) dividend income was includable in the sales factor as income-producing activity when the payee participated in the management and operations of the payer; and (3) without facts supporting the location where dividends were derived, including dividends in the sales factor denominator would result in unfair apportionment and therefore all dividends were excluded from the sales factor.



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