California: New Law Makes Techical Corrections to Perviously Enacted Single Sales Factor Law

A.B. 1546, signed by Governor on 10/11/2009. New law enacts technical correction language to the State's 2009-2010 budget legislation that was enacted in February 2009, clarifying that the State's single sales factor election is available for tax years beginning on or after January 1, 2011. In the original version of the law, an ambiguity in the language led some to potentially interpret the provision as offering the election beginning in 2009, with mandatory single sales factor apportionment in 2011.

Kentucky - Nonresident corporate limited partner has nexus.

Revenue Cabintet v. Asworth Corporation, HT-Form Inc. and D Aviation Services, Inc. Ky Ct. App (11/20/09) The Kentucky Court of Appeals affirmed a circuit court's previous ruling, agreeing that an out-of-state corporation had acquired nexus in Kentucky soley due to its investment in a pass-through entit as a 99% limited partner. The court agreed that the corporate limited partner had acquired nexus with the State through the partnership that did business within the State, as Kentucky recognizes the flow-through nautre of partnerships and accordingly, imposes state inocme tax upon partners rather than upon the partnership itself. The court also agreed that the corproation's derivation of income from a partnership doing business within and outside the State satisifed the Commerce Clause substantial nexus test, as well as Due Process Clause minimum contacts requirement.