The California Supreme Court declined review of a Court of Appeal decision where Apple, Inc. avoided taxation of foreign dividends and sustained a deduction of interest. (Apple, Inc. v. Franchise Tax Board (September 12, 2011) 132 Cal.3d 401, petition for review denied January 4, 2012) The foreign dividend controversy originated from the shift from a “worldwide combination” apportionment formula where foreign dividends are exempt to a “water’s edge” apportionment where the underlying income is partially taxable.
The FTB argued that a last in, first out accounting method should be used, which would impose tax on the foreign dividends because they were earnings of foreign affiliates that were not included in the “water’s edge” election. However, Apple presented ample evidence that the dominant purpose of its borrowing in the previous year was to fund its domestic operations, which permitted an interest deduction.
At Spidell’s Federal/California Tax Update Seminar we will talk about:
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What property tax is deductible
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How the new federal Schedule D works
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How to treat the sale of gold and silver
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What happens if your client is selling stuff on e-Bay
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New laws coming this year and old laws going away
Click here to register today.
