Tax on Tax Credits: U.S. Tax Court Addresses Federal Taxation of Refundable State Credits in Maines

By on July 27, 2015

As more and more states offer refundable tax credits to induce economic development, it is critical for businesses weighing incentive offers to take into consideration the federal income tax implications of an award. While a payment may be called a “credit” and claimed on a state tax return, that payment might nonetheless constitute taxable income for federal tax purposes. Imposition of federal income tax on incentive payments can materially reduce their value and should be considered when weighing the potential benefit of an award. A recent United States Tax Court decision, Maines v. Commissioner, demonstrates that risk.

Read the full article.

STAY CONNECTED

TOPICS

ARCHIVES

jd supra readers choice top firm 2023 badge