COURT STRIKES DOWN FTB PROVISION.The U.S. Supreme Court recently decided in Hunt-Wesson, Inc. v. Franchise Tax Board of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). that California's limitations on interest expense deductions violate the U.S. Constitution's Due Process and Commerce Clauses. California's rule for calculating "unitary unitary pertaining to a single object or individual. " income permits the interest expense deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. to nondomiciliary corporations only to the extent that it exceeds out-of-state income, thus allowing tax on income which the state could not otherwise tax. The court held that by offsetting or disallowing legitimate deductions where there is no relationship between the disallowed expense and exempt income Exempt Income Certain types of income that are not subject to income tax. Notes: Examples of exempt income include: gifts under $10,000, death benefits, health benefits, and some scholarships. See also: Exemption , California, in effect, indirectly taxed income it could not tax directly. |
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