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Addressed the theoretical underpinning of the unitary business principle and discussed the application of the unitary business principle in both unitary and separate company states and key u.s The term unitary business is often used in tax law, particularly in discussions about corporate taxation and apportionment of income across states. Supreme court decisions concerning the unitary business principle.
The unitary business principle helps decide which companies or parts of companies are included when figuring out how much income a state can tax. In legal terms, a business is considered unitary if its operations within a state are dependent on or contribute to its operations outside that state State corporate income taxation presents unique challenges for businesses operating across multiple jurisdictions
In this article, the first in a series on combined reporting, the authors discuss the rules courts have used for finding a unitary business and offer strategies for taxpayers that may or may not want to establish a unitary business for tax purposes.
Under this test, if the operation of a portion of the business done within the state depends on or contributes to the operation of the business outside the state, the operations are unitary. Determining whether related companies must file on a combined basis is one of the most fundamental exercises in state taxation If a unitary business exists, then generally the taxable income or loss of each member of the combined group is aggregated to arrive at taxable income.
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