Chapter 5 Introduction

By Jason Watson, CPA
Posted Monday, October 18, 2021

This in itself is not a reason to avoid the S corporation election, but there is not a better place for this material. State nexus stuff is getting very complicated so we decided to make this a separate chapter since it will continue to grow over time.

Every year all 50 states plus the District of Columbia and New York City participate in a survey conducted by Bloomberg. Here is the link for the latest results, but a warning is in order first. The 2017 report is 523 pages (yet the table of contents is rich with detail to find your particular area of interest).

wcginc.com/1744

There is also an executive summary for 2018 available from Bloomberg, and it is only 20 pages (nice!)-

wcginc.com/1746

There are several concepts here and a ton of material. Here is the mini table of contents-

• Disclaimer

• Wayfair Case Part 1

• Nexus Theory

• Constitutional and Legislative Standards (Commerce and Due Process Clause, and Public Law 86-272)

• Sales Tax, Income Tax

• Physical and Economic Presence, Nexus Attached

• Wayfair Case Part 2

• Services and Tangible Personal Property (TPP)

• Costs of Performance, Market-Based Approach

• Allocation and Throwback

• FBA, Drop Shipments, Trailing Nexus Revisited

We will explore each of these in turn, and then attempt to bring it all together with a recap. The operative word is attempt since this stuff is changing all the time and will continue to evolve through court decisions, state legislation and the impending congressional moves.