The Idaho Supreme Court recently affirmed a District Court’s judgment that the gain from the sale of a 78.54% membership interest in a limited liability company did not constitute ‘business income’ under Idaho Code section 63-3027. In Noell Indus. Inc. v. Idaho State Tax Comm’n, Docket No. 46941 (Idaho 2020), the court determined that “this type of gain does not meet the definition of ‘business income’ under either the transactional test or functional test (including the unitary business test),” and was therefore not apportionable income.
Kelsey Muraoka is an associate in the New York office of Baker McKenzie and a member of the Tax Practice Group. Prior to joining the Firm, Kelsey provided multistate tax services at a Big Four accounting firm where she advised clients on a variety of state and local tax issues.