Close
Close

California State Board of Equalization rules on business/nonbusiness income treatment of proceeds

Download RFP
The California State Board of Equalization (SBE) recently ruled on the business/nonbusiness income classification of proceeds received by a taxpayer following two significant transactions. With respect to the revenue streams generated after one transaction, the SBE reversed a determination of the California Franchise Tax Board (FTB) and determined that dividend income and the gain from the sale of publicly traded stock received by the taxpayer pursuant to its sale of a business should be classified as nonbusiness income and allocated outside California. However, with respect to income recognized by the same taxpayer from equity and debt interests (including the gain recognized from a reacquisition of stock) generated after a second transaction, the SBE sustained the FTB’s prior determination, concluding that such revenue streams were properly classified as business income that was subject to apportionment.

Download the PDF.