SALT To Taste: It Serves an Operational Function to Whom? Many States are Applying 'Operational Function' in the Wrong Direction

One of the many areas of confusion and misapplication that we see, when states assert taxation of income based on an operational function concept, is determining in which taxing jurisdiction the operational function is served, thereby resulting in that state’s ability to tax non-domiciliary income earned from a separate asset.  In evaluating application of the operational function concept, the basic questions with which to begin are who or what is serving the operational function; to whom is the operational function being served; and where is the recipient of this benefit located?  It’s very possible the state has itself turned around and is lost on the operational function path.

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