United States

California: Boldly Going where no State has Gone Before

Jun 01, 2015
From KPMG TaxWatch

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The California Franchise Tax Board (FTB) is launching a new project. The FTB recently announced that it will hold an interested parties meeting on July 9, 2015 to explore an out-of-this world regulatory project. More specifically, the FTB wants to assess the advisability of undertaking a regulatory project on how the state should source receipts derived from sending people and cargo to and from space. At this initial meeting, FTB staff plan to solicit input from industry and practitioners on tax issues that should be addressed in any proposed regulation. Possible topics for discussion include (1) how space transportation activities should be defined; (2) at what point should aircraft or space vehicles be considered as traveling into space; and (3) what factors and weight should apply to receipts derived from space transportation activities. Apparently recognizing that space travel is not without kinks, the regulation may also need to address the treatment of receipts from unsuccessful or aborted missions. Finally, the pesky problem of receipts assigned to a jurisdiction where a taxpayer is not taxable takes on a whole new meaning when dealing with receipts that could be assigned to locations beyond the earth’s atmosphere. Thus, the FTB notes that any potential regulatory effort may need to address the treatment of so-called “nowhere income.” Please stay tuned to TWIST for future updates on a possible space transportation activities regulation.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.