In short
Under a throwback rule, some states add to their own sales factor the sales of goods shipped to a state where the seller isn't taxable, so the income doesn't escape state tax altogether.
Key takeaways
- Sales can be untaxed in the destination state because of no nexus or Public Law 86-272 protection.
- A throwout rule instead removes such sales from the denominator of the sales factor.
- Not every state has either rule.
Where it's tested
TCP: Multi-Jurisdictional & International Basics — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In state apportionment, the sales factor generally measures: