Episode 47

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Published on:

6th Jul 2022

Insights on California Tax Issues with Michael Cataldo (Part 1)

In the first episode in a two-part series of the SALTovation podcast, Meredith Smith and Stacey Roberts, from TaxOps’ SALTovation Team, speak with Michael Cataldo, of Cataldo Tax Law in California. Michael shares his insight with his experience on Franchise Tax Board, public accounting and private law on the publications released by the Franchise Tax Board. He also talks about tax issues and cases related to Public Law 86-272 and business versus non-business income.

 


Topics discussed in this episode:


  • Current issues discussed by Franchise Tax Board including market-based sourcing and multi-state practice


  • Business vs. non-business income and what qualifies as doing business in the state


  • Public Law 86-272 and alternative proportment

 


What You Will Learn:


  • [00:57] An introduction to Michael Cataldo


  • [03:21] Current tax issues


  • [10:20] Business vs. non-business income


  • [17:55] What qualifies as doing business in the state


  • [22:05] Interpreting Public Law 86-272


  • [29:28] The procedure for alternative proportment

 


Quotables:


 


  • “Over the years, there’s been this sort of gradual shift where my clients used to be mainly located in California, and now more and more of them are located outside the state.” - Michael Cataldo [04:09]


  • “It used to be a little more debatable and it’s still not completely decided, but is it business or non-business income? You have to look at that question.” - Michael Cataldo [11:38]


  • “Trying to explain that concept of business income vs. non-business income to the unknowing, it’s like ‘But I’m not in the business of selling land.’ But ‘Ok, fine, but did you use that land in order to create your other business income?’ It’s almost a given that if you call something non-business income, you will be audited. Like 100%” - Meredith Smith [14:03]


  • “These issues come all the time and there is room to argue about it. Now California has their rule and regulation on substantial and unusual sales are thrown out of the sales factor but the income is still in there. The question is ‘Hey, is this a fair reflection of income?’ Sometimes it’s not.” - Michael Cataldo [17:00]

 


Relevant Links:


Cataldo Tax Law: cataldotaxlaw.com


Michael Cataldo on LinkedIn: linkedin.com/in/michael-cataldo-aaa9205/


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Production Support

This episode was produced with support from Truth Work Media. www.truthworkmedia.com

Mentioned in this episode:

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About the Podcast

SALTovation: Making Sense of State and Local Tax
Welcome to SALTovation. The SALTovation show is a podcast series featuring the leading voices in state and local tax (SALT). Here we talk about issues, strategies, and planning tools to help you make sense of SALT. Because, in SALT, there is no “one and done.” SALT is a puzzle of ever-changing pieces. Solving that puzzle is our business at SALTovation. Tens of thousands of listeners know they won't get tax talk as usual with the SALTovation team. Our team is known for straight-talk with a flair for fun, providing clarity and opinions that move businesses forward with confidence.

Attorney, CPA, speaker, and writer Judy Vorndran leads the SALTovation team as they go inside business to help deal with the daily operations and long-term strategies of making SALT less “taxing.” Judy has spent more than 25 years advocating for businesses with innovative strategies, renowned knowledge and experience. She has helped guide thousands of taxpayers across the nation and globally through the morass of SALT, freeing them to concentrate on growth. Joining Judy are the wickedly smart members of the SALTovation team, who have seen, worked with and tamed some of the most prickly issues in SALT. They enjoy sharing their stories and knowledge with listeners.

Solving the SALT puzzle doesn’t happen in a vacuum; it takes a community. So, we invite leaders in business and state and local tax to share their stories, challenges and successes on this show. Drop us a line at SALTovation.com if you'd like to join the conversation and tune into our regular series at TaxOps.com.