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South Carolina Supreme Court holds party proposing alternative apportionment method has burden of proof

The South Carolina Supreme Court has affirmed the Court of Appeals’ holding that the party proposing the use of an alternative apportionment method has the burden of proof. Specifically, the moving party must prove by a preponderance of the evidence that: (i) the statutory formula does not fairly represent the taxpayer’s business activity in the state; and (ii) its alternative method is reasonable. In reaching its decision, the Supreme Court disagreed with the Court of Appeals that the moving party is further required to satisfy the second part of the test by proving that the alternative formula more fairly represents the taxpayer’s business activity in the state. Furthermore, the Court of Appeals misapplied Media General Communications Inc. v. Department of Revenue by requiring the moving party to prove that the alternative formula is more reasonable than any competing methods.

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