In a pending precedential decision, the California Office of Tax Appeals (OTA) found that a beverage distribution division was not unitary with the taxpayer’s other divisions. As a result, the income from the sale of the beverage division was nonbusiness income and not apportionable to California. Based on the evidence presented, the OTA also held that the tax benefit rule did not require recovery of deductions previously taken on a unitary basis.
California Office of Tax Appeals Rejects Unitary Business Treatment for Gain from Sale of Company Division
