TAX NEWS - August 2009

Apportionment and Allocation of Income for Corporations, Partnerships and Limited Liability Companies FAQ - State of Georgia tax

Q. What code section and regulation provide guidance in this area?

A. Georgia Code Section 48-7-31 and regulation 560-7-7-.03 provide guidance in this area


Q. How does Georgia source gross receipts for a company which manufactures, produces, or sells tangible personal property?

A. Georgia gross receipts are all gross receipts derived by the taxpayer from products shipped or delivered to customers in Georgia in the regular course of its trade or business.


Q. How does Georgia source gross receipts where the business income is derived principally from business other than the manufacturing, production, or sale of tangible personal property?

A. Please see regulation 560-7-7-.03.


Q. Does Georgia recognize Internal Revenue Code Section 338(h)(10) elections by c-corporations and/or s-corporations for state income tax purposes? How would the state treat the gain/loss arising from a section 338(h)(10) election?

A. Georgia does recognize the IRC 338(h)(10) election. In this case, the gain on the sale of the stock would not be recognized. Instead there would be a deemed sale of the assets, which would be reported on the target corporation's return. The income would be apportioned and allocated in the normal manner.