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Articles by Walter R. Calvert
California's "Hot Asset" Sourcing Rule Gets the Cold Shoulder: OTA Sides with Nonresidents
A nonresident's gain from selling a partnership interest generally is not taxable in California simply because the partnership conducts business in the state. But that has not stopped the California Franchise Tax Board (FTB) from trying to limit this general rule. Since issuing Legal Ruling 2022-02 in July of 2022, the FTB has argued that certain gains from the sale of partnership interests should be sourced to California and taxed based on the partnership's California business activities.
Data Center Tax Incentives Under Pressure as States Reassess Costs and Infrastructure Impacts
Data centers have become a major focus of state and local tax policy. For years, states and localities have used sales tax exemptions, property tax abatements, infrastructure incentives, and other economic development tools to attract data center investment. Those incentives remain important, particularly as demand for cloud computing and artificial intelligence infrastructure continues to grow.
California Eyes Sales Tax on SaaS and Digital Software: Is a New Tax on the Horizon?
California is considering a significant expansion of its sales and use tax base to include sales of digital prewritten software, regardless of how the product is delivered. The proposal would apply to software delivered by physical medium, electronic transmission or download, or remote access through the internet, including software as a service (SaaS), where the customer accesses the software hosted by the vendor but does not take possession of it.
The One Big Beautiful Bill Act - Impact on the Opportunity Zone Program | JD Supra
The Tax Cuts and Jobs Act, signed into law on December 22, 2017 (the TCJA), authorized the opportunity zone tax incentive program (the OZ Program) to encourage investment in low-income community businesses.
SALT Alert: Fourth Circuit Pulls the Plug on Maryland’s Digital Advertising Tax Disclosure Ban | JD Supra
On August 15, 2025, the U.S. Court of Appeals for the Fourth Circuit issued a published opinion in Chamber of Commerce v. Lierman, reversing a district court decision and holding that Maryland's pass-through prohibition of the state's digital advertising tax (DAT) is unconstitutional. Background on the Maryland Digital Ad Tax Maryland enacted the DAT in 2021 over a gubernatorial veto, becoming the first state to impose such a levy.
SALT Alert: Final OBBBA Temporarily Expands SALT Cap and Revises AMT Phaseout | JD Supra
The One Big Beautiful Bill Act (OBBBA or the Act), enacted in July 2025, introduces significant changes to the treatment of state and local tax (SALT) deduction and the alternative minimum tax (AMT). While the legislation offers temporary SALT relief to many taxpayers, particularly those in high-tax jurisdictions, it also introduces new income-based limits and permanent structural changes to the AMT that may increase liability for upper-income filers.
SALT Alert: Maryland Enacts 3% Sales Tax on Technology and Data Services, Effective July 1, 2025 | JD Supra
As part of its fiscal year 2026 budget legislation, Maryland enacted a number of new tax provisions, including the imposition of a 3% sales tax on a broad range of information technology and data services. The tax took effect July 1, 2025, and significantly expands the state’s sales tax base by treating certain digital services as taxable services for the first time.
SALT Alert: Maryland Fixes PTET for Residents, but S Corporations Face New Risk | JD Supra
Expansion of the PTET Base for Maryland Resident Owners As part of its fiscal 2026 budget legislation (H.B. 352), Maryland enacted a significant change to its elective pass-through entity tax (PTET) regime. Effective for tax years beginning after December 31, 2025, the PTET base for resident owners of electing pass-through entities will no longer be limited to Maryland-source income.
SALT Alert: Senate Unveils Updated OBBBA SALT Cap Proposal | JD Supra
On June 28, 2025, Senate Republicans released their updated version of the One Big Beautiful Bill Act (OBBBA), moving closer to finalizing their sweeping tax reform package ahead of a self-imposed July 4 deadline. A key feature of the Senate proposal is a significant, though temporary, increase to the state and local tax (SALT) deduction cap, paired with a phaseout for high-income taxpayers. Under the proposal, the SALT deduction cap would rise from $10,000 to $40,000 beginning in 2025.
SALT Alert: Senate Tax Bill Targets SALT Cap Workarounds, Including New Limits on PTET Deductions | JD Supra
On June 16, 2025, the Senate Finance Committee released a draft package that includes a major provision aimed at curbing the use of state pass-through entity taxes (PTETs) to bypass the federal $10,000 cap on state and local tax (SALT) deductions.
Maryland Tax Updates - January 2024 | JD Supra
Tax Court Modifies Rushmore Method for Hotel Valuation. The Maryland Tax Court recently modified the traditional Rushmore income approach used to determine the fair market value (FMV) of the real estate component of a hotel. The Court modified the approach to allow the removal from net operating income (NOI) of income attributable to (1) start-up costs and (2) a return “on” and “of” furniture, fixtures, and equipment (FF&E).
Maryland Tax Updates - January 2024
Tax Court Modifies Rushmore Method for Hotel Valuation. The Maryland Tax Court recently modified the traditional Rushmore income approach used to determine the fair market value (FMV) of the real estate component of a hotel. The Court modified the approach to allow the removal from net operating income (NOI) of income attributable to (1) start-up costs and (2) a return “on” and “of” furniture, fixtures, and equipment (FF&E).
Nonresident Owners Selling A Business With California Contacts? Be Wary Of Selling Through A Conduit Holding Entity
Clients frequently come to us while in the process of selling interests in California-based businesses. Clients who are not residents of California typically expect that they will not be subject to California income tax on the sale of their business interests. However, often the planned structure of the sale will generate California income tax.
Nonresident Owners Selling a Business with California Contacts? Be Wary of Selling Through a Conduit Holding Entity | JD Supra
Clients frequently come to us while in the process of selling interests in California-based businesses. Clients who are not residents of California typically expect that they will not be subject to California income tax on the sale of their business interests. However, often the planned structure of the sale will generate California income tax.
Should I Register My Entity to Do Business in a State? Supreme Court Case Reminds Us of the Scope of Considerations | JD Supra
Clients frequently ask whether a business entity needs to register to do business in a particular state with which the entity has begun to have some degree of ongoing contact. In responding we typically consider the state's requirements as to when registration is required, the penalties for failure to comply, and collateral consequences of registration, including state tax law considerations. In its June decision in Mallory v.
IRS Ruling Provides Insights on Compensation Options for Managers of Tax-Exempt Bond-Financed Hotels, CCRCS and Similar Facilities | JD Supra
Facilities owned by nonprofits and government entities are frequently financed with tax-exempt bonds and managed by for-profit management companies. To avoid tainting the tax-exempt status of the interest payable on those bonds, due to excessive "private business use" of the financed facility, the terms of the management contracts are drafted to comply with IRS safe harbor guidelines (IRS Revenue Procedure 2017–13, or the "Guidelines").
California Nonresidents Selling Partnership Interests Beware: Franchise Tax Board Conflates Federal Gain Recharacterization Rules for Hot Assets with State Sourcing Rules | Venable LLP - JDSupra
Nonresidents of California generally are not taxed by California on gain resulting from the sale of partnership interests. Under new guidance issued by the California Franchise Tax Board ("FTB") nonresidents can now expect to be subject to California tax on a portion of such gain with respect to any partnership that has been filing a tax return with California.
Cryptocurrencies, NFTs, and State Tax - There's Lots That We Don't Know Yet | JD Supra Original
Every so often something new and different comes along in the world of state and local tax that does not fit within the existing conceptual frameworks and rules. For example, the delivery of digital books and other digital media in place of physical media upended sales tax systems that historically had applied mainly to sales of tangible property.
Seller Beware - Court Rules That California Can Tax Gain from the Sale of Goodwill | JD Supra
A California state appellate court recently upheld the trial court's decision in The 2009 Metropoulos Family Trust v. Franchise Tax Board that nonresident shareholders of an S corporation source gain on the S corporation's sale of its intangible assets using the S corporation's apportionment factor and not based on the shareholders' state of residence.
Seller Beware - Court Rules That California Can Tax Gain From The Sale Of Goodwill - Income Tax - United States
A California state appellate court recently upheld the trial court's decision in The 2009 Metropoulos Family Trust v. Franchise Tax Board that nonresident shareholders of an S corporation source gain on the S corporation's sale of its intangible assets using the S corporation's apportionment factor and not based on the shareholders' state of residence.
California Improves Its SALT Cap Work-Around | JD Supra
California has revised its existing SALT cap work-around to address and liberalize several of the significant limitations on the work-around that we discussed in our prior alert. On February 9, Governor Gavin Newsom signed into law Senate Bill 113 ("SB-113"), which amended provisions of the SALT cap work-around to make them more favorable to taxpayers, together with enacting other tax benefits.
3 Key Improvements To Maryland Pass-Through Entity Tax
Law360 (March 23, 2021, 12:18 PM EDT) -- For all taxable years beginning after Dec.
Maryland Passes First-of-Its-Kind Digital Advertising Tax
On February 12, 2021, the Maryland General Assembly voted to override Governor Larry Hogan’s veto of House Bill 732, which carried over from the close of last year’s legislative session and enacts the nation’s first gross receipts tax on digital advertising targeted at Maryland consumers. The tax takes effect on March 14, 2021 and applies to all taxable years beginning after December 31, 2020. Legal challenges to the tax have already begun in the Maryland courts.
Tax and Employment Law Questions Raised by Remote Work
The proliferation of remote work during the pandemic has created new flexibility for association employers and their teams. But the prospect of maintaining remote employees for the long term also raises complex tax and employment law issues that management must evaluate. The explosion in the number of association workers who now perform their jobs remotely as a result of the pandemic has brought to light a number of state and local issues for employers that have long been simmering.
Marketplace Vendors Offered Voluntary Closing Agreement Program for State Tax Exposure
As states continue their quest to compel online vendors to collect sales and use tax on sales to customers located in the state and to subject such vendors to state income tax, a current trend has been targeting vendors selling via online marketplaces.
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