Problem - Can You Be a Nowhere Adviser

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Problem - Can You Be a Nowhere Adviser?

The intent of much of today's multistate income tax planning is to create so-called nowhere sales, such that the income from the transaction is not subject to tax in any state. Suppose, for instance, that a sale is made from Georgia (a state with no throwback rule) into Nevada (the place of ultimate destination, but a state with no income tax). No state-level income tax liability is generated.

Is it ethical for a tax adviser to suggest such a strategy? Could you ethically propose the establishment of a sales office in a nonthrowback state, thereby avoiding state income tax on a transaction that is fully taxable under Federal rules?

Reference no: EM132630648

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