Income misattribution under formula apportionment

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National Bureau of Economic Research , Cambridge, MA
StatementJames R. Hines, Jr..
SeriesNBER working paper series -- working paper 15185, Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15185.
ContributionsNational Bureau of Economic Research.
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LC ClassificationsHB1
The Physical Object
FormatElectronic resource
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Open LibraryOL23683755M
LC Control Number2009656042

Income misattribution under formula apportionment as income misattribution creates incentives for firms to structure their affairs in new ways. Since the formulas apply to affiliates within consolidated groups, it follows that the use of allocation formulas creates incentives to modify the ownership of companies or operations in order to Cited by: Get this from a library.

Income Misattribution under Formula Apportionment. [James R Hines] -- Alternatives to the current system of separate tax accounting, such as the proposed Common Consolidated Corporate Tax Base in Europe, would apportion a. Income Misattribution Under Formula Apportionment Article in European Economic Review 54(1) July with 48 Reads How we measure 'reads'.

Get this from a library. Income misattribution under formula apportionment. [James R Hines; National Bureau of Economic Research.] -- Alternatives to the current system of separate tax accounting, such as the proposed Common Consolidated Corporate Tax Base Income misattribution under formula apportionment book Europe, would apportion a firm's worldwide profits using formulas based.

Income Misattribution under Formula Apportionment James R. Hines Jr. University of Michigan and NBER January I thank the University of Michigan for financial support of this research, and Owen Kearney and Fan Fei for outstanding research assistance. Marco Runkel & Guttorm Schjelderup, "The Choice Of Apportionment Factors Under Formula Apportionment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic.

Income Misattribution under Formula Apportionment James R. Hines, Jr. NBER Working Paper No. July JEL No. F23,G34,H25,H87 ABSTRACT Alternatives to the current system of separate tax accounting, such as the proposed Common Consolidated.

Income Misattribution under Formula Apportionment James R. Hines, Jr. NBER Working Paper No. Issued in July NBER Program(s):Public Economics Alternatives to the current system of separate tax accounting, such as the proposed Common Consolidated Corporate Tax Base in Europe, would apportion a firm's worldwide profits using formulas based on the location of employment, capital.

James R. Hines, Jr., "Income Misattribution under Formula Apportionment," NBER Working PapersNational Bureau of Economic Research, Inc.

Handle: RePEc. Apportionment is an accounting term used to describe an allocation of a portion of a business's gross earnings.

Description Income misattribution under formula apportionment PDF

It is possible to calculate the apportionment rate of this allocation with some basic information about the business's earnings and total book value. Apportionment is generally expressed as a. The Revenue Consequences of Using Formula Apportionment to Calculate U.S.

and Foreign-Source Income: A Firm-Level Analysis February International Tax and Public Finance 5(1)   All states with corporation taxes use at least one of the following corporation tax income apportionment formulas.

Three-Factor Formula – This formula uses three fractions representing the ratios of a company ' s property, payroll, and sales within a taxing state to its total property, payroll, and sales.

Recommended Formula for the Apportionment and Allocation Of Net Income of Financial Institutions Adopted Novem shall be apportioned to this state by multiplying such income by the apportionment income under the Federal Internal Revenue Code.

In File Size: 67KB. We get a lot of questions from legislators and journalists about nexus and apportionment, two important concepts in state tax policy that affect what multistate corporations pay in taxes, and which states they pay it to.

The best run down of these concepts can be found in Author: Scott Drenkard. MULTISTATE TAX COMMISSION Maximizing the synergies of multi-state tax cooperation Formula for the Apportionment and Allocation of Net Income of Financial Institutions Amended by the Multistate Tax Commission – J Section 1.

Apportionment and Allocation. Fig. 2 shows changes in the tax payments under formulary apportionment relative to the status quo over the three years in the sample.

The solid line is the three-factor formula. There is a strong increase in tax payments over time, rising from 6% in to 22% in Cited by: 7.

STATE APPORTIONMENT OF CORPORATE INCOME (Formulas for tax year -- as of January 1, ) Ohio Tax Department publishes specific rules for situs of receipts under the CAT tax.

Details Income misattribution under formula apportionment FB2

(3) Maryland is phasing in a single sales factor for tax years after factor formula is required if no specific business formula is specified.

to apportion income in andrespectively.9 The apportionment formula used to estimate corpo-rate income tax capacity for Nevada, Washington, and Wyoming, the three states without any corpo-rate income tax, is 50 percent sales, 25 percent payroll, and 25 percent property.

The lack of data on the distribution of a common. an overview of the interest expense allocation and apportionment rules. The Regulations require that the allocation and apportionment of interest expense be made on the basis of assets (the asset m ethod) and not on gross income.

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Under the asset method, interest expense is apportioned between (or among) statutory and residualFile Size: KB. upon income calculated under the provisions of this Act. In passing the UDITPA, the California legislature statutorily authorized a variation of the unitary business or formula apportionment method of income allocation, known as the worldwide combined reporting method.

Barclays 1. The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income. The denial of a petition under this subparagraph shall be appealable pursuant to Code Section Such an appeal shall be filed within 30 days.

LB&I International Practice Service Process Unit – Audit Shelf Business Outbound Volume 3 FTC Management UIL Code Part Accessing Foreign Source Income Level 2 UIL Chapter Interest Expense Allocation/Apportionment Level 3 UIL Sub-Chapter N/A N/A. Unit NameFile Size: KB. Today’s Monday Map shows state corporate income tax apportionment formulas.

These formulas are used by states to determine what percentage of a corporation’s profits are taxed. Generally, three categories are used: property, payroll, and sales. As an example, consider a company whose corporate office is located in North Carolina and has the bulk of its Author: Nick Kasprak.

An Act Concerning A Single Factor Apportionment Formula For Manufacturers Under The Corporation Business Tax. Be it enacted by the Senate and House of Representatives in General Assembly convened: Section of the general statutes, as amended by section 4 of public actis repealed and the following is substituted in lieu thereof.

Formulary apportionment, also known as unitary taxation, is a method of allocating profit earned (or loss incurred) by a corporation or corporate group to a particular tax jurisdiction in which the corporation or group has a taxable is an alternative to separate entity accounting, under which a branch or subsidiary within the jurisdiction is accounted for as a separate entity.

James R. Hines Jr., “Income Misattribution Under Formula Apportionment” () European Economic Review Governments have been increasingly dissatisfied with the ability of multinational corporations to move taxable income among. 20 Research & Development Specific Allocation of R&D Expenses Gross income method for the FTC limitation 25% of the R&D is allocated to the country where the majority of the research was performed Sales income method for the FTC limitation 50% of the R&D is allocated to the country where the majority of the research was performed For the DPAD, no specific allocation so % ofFile Size: KB.

Book Chapters "Comment on 'Fundamental Tax Reform: A Comparison of Three Options'." In The Economics of Tax Policy, edited by A. Auerbach and K. Smetters. August Corporate Income Tax Apportionment and the “Single Sales Factor” One of the thorniest problems in administering state corporate income taxes is how to distribute the profits of multi-state corporations among the states in which they operate.

Ultimately, each corporation’s profits shouldFile Size: KB. does not invalidate an apportionment formula simply because it ‘‘may result in taxation of some income that did not have its source in the taxing State’’ or ‘‘occa-sionally over-reflect or under-reflect income attribut-able to the taxing State.’’6 Instead, an apportionment formula.

Formula Apportionment vs. Separate Accounting: A Private Information Perspective Thomas A. Gresik Department of Economics and Econometrics University of Notre Dame May Abstract: Inthe European Commission recommended that member countries use formula apportionment procedures to tax multinational companies.The steps to this formula are as follows: Step 1: Compute the corporation's apportionment percentage on a separate entity basis, using the multiple-factor formula that applies under current administrative rules.

Exclude from these factors any intercompany transactions between members of the combined group. This paper investigates the impact of corporate taxes on the input factor choice of multi-jurisdictional entities (MJEs) under a formula apportionment (FA) regime.

Our testing ground is the German local business tax that applies FA regulations with income apportionment according to the relative payroll share. Using unique data on the population of German firms, we find that MJEs distort Cited by: