Special Commentary: Tax Treatment of Investment Companies by the State – Corporation Tax


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Kelvin Lawrence, partner of Dinsmore, was published in Bloomberg tax with his article “Special Commentary: State Tax Treatment of Investment Partnerships.” Read an excerpt below.

The Multistate Tax Commission has undertaken an ambitious project on state taxation of partnerships. Their partnership task force is made up of volunteers from numerous state tax departments, with expert assistance from MTC attorneys Helen Hecht and Chris Barber. His first milestone was the development of a plan that divided the task force’s workload into four groups of issues: taxation of income and partnership elements; taxation of gains (losses) from the sale of an interest in a partnership; entity-level tax issues; and administration and enforcement.

The first topic that MTC staff chose and the working group approved for detailed analysis was “the trillions of dollars flowing through investment partnerships.“MTC staff prepared a detailed white paper, State tax treatment of investment partnerships, which is useful reading to understand the depth and breadth of the issues. Section II.B. indicates that investment partnerships, broadly defined as the industry segment of finance and holding companies, accounted for 70% of all reported partnership revenue during the years studied, which explains why investment partnerships investment and their partners should be analyzed first.

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