Multistate Audit Technique Manual

CALIFORNIA FRANCHISE TAX BOARD Internal Procedures Manual Page 1 of 5Multistate Audit Technique Manual _______________________________________________________________________________ 7900 INTRASTATE APPORTIONMENT Even though unitary business income is geographically apportioned on the basis of a combined report, each taxpayer member of a combined group is subject to its own tax liability. The minimum franchise tax and alternative minimum tax are applied on an individual entity basis, as are net operating losses and most tax credits. A taxpayer's nonbusiness income or losses may only be offset against the California business income apportioned to that taxpayer. When separate Notices of Proposed Assessment are issued, each Notice must reflect only the tax deficiency for that particular taxpayer. Since unitary business income is combined and apportioned on a group basis, it is necessary to further apportion the California income among the taxpayer members of the group. This process is referred to as intrastate apportionment. (If any member of the unitary group has sales assigned to the numerator of the sales factor, but is not itself taxable in this state under the immunity of P.L. 86-272, it is also necessary to calculate the relative California factors of the taxpayer members. This computation is described in MATM 7905.) Effective for cases closed after June 30, 1996, intrastate apportionment schedules showing the separate tax ...