California FTB Determines Income Taxability of Holding Companies Considering Unity of Apportioning Pass-Through Entities

The California Franchise Tax Board (FTB) Oct. 25 determined in a letter ruling the taxability of holding companies considering the unity of apportioning pass-through entities for corporate income and individual income tax purposes. The FTB noted that: 1) holding companies have limited, if any, operations, so other, non-traditional factors are more heavily weighted in determining unity; 2) the purpose of the holding company in the structure of a business could also support a finding of contribution or dependency and, therefore, evidence unity among the holding company and the operating subsidiaries; and 3) the traditional unity tests weren’t an exact fit ...