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State Income Taxes - Allowable or Unallowable?

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This is becoming an issue among our members so let’s address it.  There are auditors that are saying it is not allowable. Some say to exclude out of the G&A Pool. Some say that the state taxes are to be included in the G&A base.  Understanding this can save big dollars.  It has already for some. 

It may get a bit complicated but try to follow the logic. This is a more advanced issue than discussed in our class but let’s have at it!  Please review the entire discussion to see the issues that affect allocation of these costs.  Also, please note that comments in Blue are my opinion and interpretation for reference and not a part of government documented guidance. 

Are State Income or Franchise Taxes Allowable?  Yes, Generally, Subject to guidelines.  That’s the simple answer.  Now for a few details…



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