This taxpayer sold a significant business and reported an apportioned share of the gain to Florida. Advice from a “Big 4” firm was that “Florida doesn’t have non-business income” and therefore the client was advised to report an apportioned share of the gain. We told the client that while Florida has a statute that typically requires apportionment this is certainly not always the case. The law actually requires all income to be apportioned unless allocation would be required under the due process clause of the U.S. Constitution. We had awareness that Florida, like all states, must afford taxpayers protection as required under the law of the land.
As a result, we carefully analyzed the facts in this case. As we suspected, the business sold was totally unrelated to the business selling it. In essence, the gain in this case was non-business and properly allocated away from Florida. We were successful in obtaining a $4.5 million refund in this case.
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