Minnesota DOR notice - Only income that cannot be apportioned constitutionally is nonbusiness income; no limit on allocation of gain from goodwill

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July 2017

Overview

The Minnesota Department of Revenue (the “Department”) issued Revenue Notice # 17-02 to advise that the Department does not follow a tax court case from over ten years ago (the 2006 Minnesota Tax Court’s decision in Nadler v. Commissioner), which allowed for a category of nonbusiness income to be subject to apportionment. The Department does not recognize a distinction between types of nonbusiness income. The Department requires that all business income be apportioned and all nonbusiness income be assigned/allocated.

Additionally, the Revenue Notice states that the Department does not recognize a fixed limitation on the assignment of gains from the sale of goodwill.

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Peter Michalowski

Peter Michalowski

State and Local Tax Leader, PwC US

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