Demystifying the Sales Factor: Passthrough Receipts


Catherine Battin, Maria Eberle, and Lindsay LaCava, as authors of this bylined article, explored the treatment of receipts from partnerships and limited liability companies (passthrough entities). “Passthrough entities have become a more popular form of organization in recent decades,” the authors wrote, and “the treatment of receipts from passthrough entities is increasingly important as more states shift to a single or more heavily weighted sales factor.” The authors pointed out problems and opportunities for taxpayers, particularly “when the passthrough entity is not engaged in a unitary business with its corporate partner or member.”