Tax Foundation Tests the “Climate”
That would be the “state business tax climate,” of which the Tax Foundation recently released its 2014 version.
Not surprisingly, Nevada ranks right up there (3rd, actually) among the ten best states in which to do business, trailing only Wyoming and South Dakota. And of course, our friends to the West (California) brings up the rear, beating out only New Jersey and New York among the ten lowest ranked (worst) states. The Foundation notes that the states in the bottom ten suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.
An interesting observation by the Foundation, notably in light of all of the recent Tesla hoohrah in these parts: “State lawmakers are always mindful of their states’ business tax climates, but they are often tempted to lure business with lucrative tax incentives and subsidies instead of broad-based tax reform. This can be a dangerous proposition, as the example of Dell Computers and North Carolina illustrates. North Carolina agreed to $240 million worth of incentives to lure Dell to the state. Many of the incentives came in the form of tax credits from the state and local governments. Unfortunately, Dell announced in 2009 that it would be closing the plant after only four years of operations. A 2007 USA Today article chronicled similar problems other states are having with companies that receive generous tax incentives.”
We shall see.
And when your bank gives you a few goodies, it’s probably not just because they like the color of your socks, but more likely that they are compensating you for something. So learned Parimal H. Shankar and his spouse, in a recent trip to the Tax Court.
Seems Parimal received 50,000 “thank you points” from Citibank and redeemed them to purchase a restricted coach class airline ticket. And, indeed, the bank issued him a Form 1099-MISC, reporting same as income, which Parimal omitted from his tax return.
Along came the Revenooers, of course, slapping Parimal down on the basis of Internal Revenue Code Section 61, which defines “gross income” to include “all income from whatever source derived.” IRS figured that the “points” essentially amounted to a noncash award for opening a bank account. And the Court agreed, that a premium for making a deposit into, or maintaining a balance in, a bank account equated to something given in exchange for the use of money, or essentially, interest.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.