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Taxpayer Wynne is a winner when it comes to foreign tax credits

Recent U.S. Supreme Court decision could affect multistate taxpayers.

Comptroller of the Treasury of Maryland v. Wynne et ux (No 13-485)

The United States Supreme Court recently decided that a Maryland resident taxpayer can deduct taxes paid outside the state of Maryland.  After analyzing the facts and taking into account prior cases the US court decided that Maryland’s tax law violated interstate commerce.

As many LLCs, S-Corps and Partnerships grow across state and local borders they encounter tax liabilities that accompany their newly apportioned income.  Until now Maryland has disallowed some of these foreign taxes as deductions to the Maryland resident taxpayer.  Essentially this court decision protects this income from being taxed more than once.

Many taxpayers and revenue authorities in states that have similar restrictive laws are reading the Wynne decision to determine if it has implications for similar credits in their home states.  Pennsylvania, New York and Indiana are three states in particular that have these restrictive tax laws.

Stephano Slack will continue to monitor this recent tax ruling as well as the status of other tax issues that affect our clients.

 

Nick Ciocca is a Certified Public Accountant with Stephano Slack LLC www.stephanoslack.com

October 1, 2015