How Do I Sign Pennsylvania Assignment of Partnership Interest

How do i document type sign assignment of partnership interest pennsylvania

here's the video for our last chapter of the semester in previous chapters we were studying federal income taxation but here in Chapter 12 we're gonna cover state and local local meaning county or city entities municipalities and because there's possibly hundreds of counties cities and states what we're covering here in Chapter 12 is more of general concepts some common rules that apply across the country and not really specific detail for each state or each County or each city here it says that the main purpose of taxes is to raise revenue for the government that's kind of obvious but more so that's true for state and local type governments they have to work within their budget they cannot really go into deficit spending possibly under their state constitution or county rules or bylaws unlike the federal government that runs billions maybe even trillions dollars of deficits and a national debt and of course raising revenue to offset expenditures is just one reason for taxes other reasons for taxes is to promote some type of social or environmental policy or maybe stimulate the economy examples of that would be the tax cut and Jobs Act that reduced the tax rates to help stimulate the economy or if you want to promote some type of social welfare maybe things like promoting health insurance or penalizing taxpayers that don't have health insurance we're focusing on again here in our course business taxation and we have in the past few chapters covered corporations and partnerships in the case of corporations they are taxpaying entities but they could be doing business in more than one state but typically there's one main state for each corporation and that's called their state of domicile it may not necessarily be the state in which they incorporate for example Delaware maybe Nevada are popular states to incorporate in so in case there's some type of court case they have a standing to use those state's courts to adjudicate their their cases but typically a domicile is where the business is headquarters their main state they do business in and have their management and operations of course the still can't have operations in other states and for those other states to tax the corporation there has to be some kind of connection and here we see the word Nexus yeah some type of business connection so now it's legal for those states to tax a corporation that doesn't have their domicile in that state and we're gonna study two types of taxes here in this diagram we're focusing on on sales taxes or possibly use tax and not income tax or federal income tax that we have studied for all of the past so semester so we looking at goods that's tangible personal property being sold and probably within each state and whether that state has a connection to the business and if it's yes and we'll talk about Nexus in a few slides from now and if we do have Nexus then the selling business the selling Corporation has to collect from the buyer the sales tax and remit it to that state government where the buyer is located now if the business doesn't have Nexus so here we answer no then there is still a tax but the business is not gonna collect the tax it's up to the buyer in that state to pay their own they call it now use tax which is comparable to the sales tax over here and then pay it over to their state government here in Hawaii they don't even try to enforce this use tax for consumers who buy property from out-of-state it just saw administrative ly not practical or very hard to enforce but if you are living in a state like California they try to enforce collecting this use tax by saying that any use tax that you all you should tack it on to the income tax return that you file every year here now we're talking about not sales tax but income state income tax and we're gonna see the starting point is the federal income tax that we've been talking about throughout the whole semester but federal law and state laws are different so we're gonna make adjustments either to increase the taxable income or decrease the taxable income to get to our state taxable income amount and then we're gonna divide up that state taxable income into two parts one is the main business income and the the other types of income you may have really to get this business income all we do is subtract out of the state taxable income the non-business income which could include things like investment income rent and maybe royalty royalties case all of these are then subtracted from the state taxable income to get the business type income and then if you do business in more than one state and those other states besides your domicile state has Nexus we're gonna have to divide up this business income among the states using this term called apportionment and also we'll see different factors that come in in terms of apportionment as for the non-business income probably all of this investment income will be allocated or assigned to not a portion but assign or allocated to the domicile state of the corporation when income is probably gonna be credited to the state that has the property being rented and royalty income assigned to the state where the underlying probably intangible asset is being used so we then get the apportioned business income and we add the allocated non-business income to get the so called State taxable income for each state as compared to this state base where we had adjusted a federal taxable income well at the top of this formula then whatever your state taxable income is we multiplied by the state rates it could be graduated rates or just a flat rate to get the state tax for the year okay so it's little bit more complicated than the sales tax that we saw in this previous slide here but again that's the two main taxes sales taxes or so-called use tax and then the state that income tax net income meaning that you have gross income and you - out deductions to get the taxable income as for sales tax you really don't subtract out any deductions there may be some few like bad debt but generally don't subtract now deductions when you calculate out sales taxes so let's go into detail for sales taxes so our textbook main focus is sales tax is based upon selling tangible versus intangible personal worse as real property here in Hawaii sales tax or the so called general excise tax is subjecting this type of property but also services are subject to the general excise tax and I'll have a separate video talking about again the detail for Hawaii and other states will you sell in if they have nexus with your company can also tax those sales so let's take a look at things well let's go back and look at one detailed room here it says businesses create sales tax Nexus when they have a physical presence physical presence means that you have something in that other state could be a person could be property and that makes it now connected to your business to your entity a business is required to collect sales tax from customers in a state only if it has sales Nexus so if they don't have Nexus that doesn't mean the tax disappears it just kind of forces the buyer to report a so-called use tax and pay it on their own so let's look at this example where we have kay Bailey cooperation that's in Texas so that's their domicile they sell rare books and they also have activity in New Mexico and the only thing to do is solicit sales through a so called independent agent this independent agent is not an employee of kay Bailey corporation yeah but acts only as an agent and it could be agents for other businesses but because this agent is physically present in New Mexico well look let's look at the question does K our corporation have New Mexico sales tax Nexus and if so then you got to collect sales taxes and pair over to New Mexico and the answer is yes they have physical presence through their agent even though the agents not an employee so K has to collect and pay over the sales tax to New Mexico example tu'pari cooperation this time a Texas a domicile sells fly fishing equipment and they sell now in Colorado through catalogs through flyers and of course through the internet so does Perry have Colorado Nexus where they have to collect the sales tax and pay it over to the Colorado government the answer is no so Perry doesn't have to collect the sales tax but the buyers technically have to pay that tax again called a use tax over to their Colorado government now all of this has been decided in cold cases this last one called quill and just recently recently means in 2018 there's another Supreme Court case called waive fair I think this company sells home furnishings typically online and now under this rule and there's an update they posted in our la Lima chapter 12 resources folder that talks about where fair typically many states now have nexus rules they call it economic presence versus physical persons if there's at least a hundred thousand dollars of sales by that company within their state or maybe 200 or more transactions done in their state per year these are per year amounts so if so now those companies like warefare I believe they're contesting with North Dakota that they have to collect sales taxes for sales made in that state and pair over to that gov even though there's no physical presence so this is relatively new it's not in the body of our chapter 12 but they are supplemental information again posted in our chapter 12 resources for in la Lima talking about wayfarer now when you do your assignments for the LearnSmart practice problems home working quiz just base it upon what's in in the textbook well I think it back in the homework you may have a problem on welfare with this hundred thousand limit and may not cover 200 transactions but refer to the hundred thousand limit so if you have a hundred thousand or more sales during the year in that state that the state has Nexus that company has Nexus with that state and you have to collect the sales tax and head over to that state government let's shift our tax now to income taxes this is better called net income taxed net meaning gross income minus deductions to get net taxable income so again we have to have some type of domicile state where we're headquartered and then other states we do business in if those other states have Nexus then they can taxed us on our net income okay so again there's court cases on dealing with this in fact it's almost becoming like Wayfair now where if you just sell at a high volume you may not subject you to income taxes for that state we're not quite there yet but it's kind of moving in that direction so let's take a look at what factors are used to determine if you have Nexus right now in Nexus it still has to be a fair amount being taxed and not just administrative dictated by the state usually has to go through their legislature and it has to be fair or in this case not discriminating against non-resident corporations versus the corporations that are domiciled in their state and if you are subject to their income tax of course you have to follow income tax return for that year and pay over the tax the question is now how much income how much deductions can you claim for your activity in that state to get Nexus to typically look at some type of physical presence tests physical presence could be people working for you in that state it could be property both personal and real property even intangible property being utilized in that state it mentions here though if you sell well this is selling sorry if you sell personal property and state that doesn't necessarily make don't give you Nexus due to an exception in one of the laws and that exception is this so-called public law eighty six twenty seven if the only thing you do is sell personal property and that other state without any physical presence then maybe you're not going to be subject to income taxes in that state but you gotta meet all the detailed rules here here it says you only think you're doing that other state is cell personal property so if you sell intangible property that may subject you to income income taxes for that less state if you sell real property then definitely you're going to be subject to income tax in the state where the real property is located they say that the only thing you can do in that other state is sell selling activity of personal tangible property let's see here it says those sales have to be approved by your probably domicile state also you can just take orders you in that other state and when you deliver the merchandise it has to be by delivery service it shouldn't be by your own employees your own delivery service has to be like the Postal Service or UPS or FedEx things like there's some exempted activity that still may qualify you for the exemption to be exempt from income taxes but if you have other types of activity like a service type activity connected to your sales things like repair installation that's going to disqualify you from this 86 to 72 exemption and subject the company to income taxes in that non domicile state let's take a look at an example mark corporation their domicile is like Colorado and the cell photocopiers so what they do besides selling is also they have a comprehensive service versus selling merchandise for their large clients so now they're selling in another non domicile state Utah and let's see they have no sales office no inventory in Utah so everything is just delivered to their Utah customers the order sales orders are approved not in Utah but in Colorado and again they don't use their own company for delivery here though it says to be competitive with local copiers in Utah marques its sales agents on site to supervise insulation ok that's unknown alright and training again and possibly another no no they're doing more than selling in Utah so the question is does mark have Utah income tax Nexus and the answer is yes because they do more than sell they do installation they do training that's now going to go beyond that exception for 86 to 72 and and Mark has to file an income tax return for Utah now how much income the report is another question when we talk about the allocation appropriation okay example 2 mark sells a this time copiers in Arizona and doing this for the past 25 years they approve orders in Colorado outside of Arizona and they don't use anybody in their company for delivery now one local sales representative won a large contract in the current year that's in Arizona to help facilitate the sale mark reduces its formal normal fee by 50% this is for services by their design team back in Colorado against services yeah not sale of just merchandise and Hampton do an on-site visit no I think the services is done right in Arizona integrated the clients new center and equipment sounds like installation to me also so does mark an Arizona income and have to follow an income tax for Ozona this one is a little bit fuzzy these pens are really the volume and they use the latin term de minimus and if the activity is real small compared to the whole company maybe they can be exempt from filing that arizona return and then the question is what is de minimis yeah what is too small it's hard to say when you don't have the numbers in front of you but typically if it doesn't influence a financial reader it may be immaterial and may be de minimis might be close to that way of measuring relative size there's other types of taxes besides some sales taxes and and net income taxes so it mentions in our textbook they may be other taxes I think it's Texas and Oregon and again non income based well let's look in the physical presence to determine how much of the taxes are going to be allocated to each state so one factor is the amount of sales made in each state in fact now that we're fair just looks at that to determine whether you're subject to sales tax is now not income taxes for a specific state so the more sales you make compared to the overall company sales then more Nexus you have with that state how do we file by company so eat if each company has to file a return if they have Nexus with the state that's called separate return but if the businesses the companies are related maybe they have to file and consolidated return here called unitary tax return and the advantage of at least from the government's point of vie of filing unitary is now that separate companies cannot manipulate prices to reduce the profit and reduce the income tax being paid whereas if you have to consolidate everything together now you're looking at the true profit that's subject to income taxes so we kind of saw this in the flowchart near the beginning of the slideshow to come out to a state's taxable income your starting point is typically the federal taxable income and then we are just that by either increasing or decreasing that federal taxable income for the the state rules certain types of income is taxable to the state but tax-free to federal and vice-versa certain times of elections are deductible by the state and not deductible by federal and I can vice-versa so all of that is either added or subtracted to the federal taxable income to get to the state tax base or state taxable income and they kind of just give you some examples here like federal interests Treasury bond interest is taxable to federal but tax-free to state so you would be subtracting that from the federal taxable income to get the state tax base of state taxable income so here's examples the 1i we just talked about is this one right here subtracting it out from the federal taxable income so these would be added to the federal taxable income these would be subtracted from the federal tax welcome to get the state tax base or state taxable income then that state tax base has to be divided among the states so that's where we have some type of the word is apportionment and there's a common formula accepted by most states that are that is utilized so typically the income is not going to be double taxed by two or more states again we separate the business portion from the non-business portion and what we're doing is apportioning the business income so the factors that come into play when you apportion that business income is the economic presence of a corporation estate basically the amount you sell to customers located in that state or how much employees you have in that state based upon how much you pay them and then the amount of property you have in that state that you own well I shouldn't say even owned but you could even rent or lease so all these three used to be when I first got into taxation each of these had equal weights but more and more now they're putting more weight on this sales or economic presence and the trend is maybe just only looking at that again for sales taxes we're looking at income taxes here before sales taxes looks like we're fair that Court case is making this the biggest factor and now it's kind of sliding into income taxes to be a bigger factor maybe double then these other two here so if you take a look at the sales made in that one state compared those sales for the whole company in all the states that fraction that factor is now used to allocate your sales State the tax base okay and again you do the same thing for payroll and do the same thing for property so here's the definition of sales so taking a look at again definition of sales the first of the three if state doesn't have taxes Inc State Inc net income tax then they use something called a a throwback of thrown back row allocating that sales when the sales is not substituted tax to a state that generated the sale that let's say when the item was shipped from that is subject to tax sale or services may be used in calculating economic presence but then we then only gonna tax the income based on net income and not necessarily just sales or services so the second factor was employees so we take a look at the the gross amount being paid to all employees that does not does not include payments to independent contractors acting as your agent here it says each employees total pay has to be allocated to a single state so if one employee does work for multiple states you look at the state that has the largest amount of work being done that by that employee and all of that employees pay is allocated to that one state in the case of property and that's the third factor the big one would be any real estate located in that state and then tangible personal property now the amount assigned to the property is typically the historical original cost not reduced by any accumulated depreciation and you may need to average out during the year that beginning and ending costs amounts if you leave property in a state of course you don't own it so it won't show up with any costs but still you're gonna assign a dollar amount to that leased property here it says to take the annual rent you pay and you multiply by a factor of eight and whatever that answer is added to the other costs and which cause a property owned in that state okay that was business income in the previous slides now allocating or assigning non-business income to each state typically the investment type income interest and dividends you assign it to the corporation state of domicile in the case of rental income you assign it to the state where the rental property is located in the case of royalties this might be a little bit more subjective one is where the intangible property is being utilized and these others typically follow where the property is located so you get your business income and you multiply it by the apportionment factor which could be an average of the three items we just saw and you take your non-business income based upon what is allocated for each state and we saw in the previous slides and the total then your state taxable income you multiply it by the state's tax rates be it a flat rate or a graduated rate to get the tax for the whole year again there's maybe some other non sales tax non income tax taxes charged by certain states so typically when you say you have a business in Texas Texas doesn't have an income tax but businesses are subject to Texas Texas's margin tax I haven't seen this on the Washington State Business and occupation tax there's also certain fees that may be charged franchise taxes that may be charged by certain states that we haven't covered in this chapter ok so that's it for chapter 12 again I'll prepare a separate video going through some general rules for Hawaii income taxes and also the not the sales tax but the general excise tax for Hawaii