Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

Can Iowa tax nonresident sales of S corporation stock?

June 18, 2009

The answer should be "of course not." Unfortunately, a nonresident of Iowa had to actually protest an assessment before Iowa arrived at the right answer:

In this instance, there is no evidence that the stock was used by protester as in integral part of some business activity in the year of the sale. Therefore, the Department erred in apportioning the sale of protester’s ownership interest in Integrity to Iowa. As a result, the review unit will direct the Department’s collection section to cancel the assessment.

Except in very unusual situations, a sale of stock by an individual should always taxed only in the taxpayer's resident state.

Tags: Iowa tax policy.