The impact of Joyce & Finnigan on multi-state combined groups with intangible sales

The California State Board of Equalization decisions of In the Matter of the Appeal of Joyce, Inc.("Joyce") and In the Matter of the Appeal of Finnigan Corporation ("Finnigan") have had an impact that reaches far outside California. Joyce and Finnigan both addressed issues surrounding the calculation of a unitary group's California sales apportionment factor numerator. Many states have adopted these decisions as the basis for the calculation of their own sales apportionment factors. Many companies consider the tax implications of these cases when making business decisions. Typically, the goal is to minimize the sales of tangible property apportioned to a particular state. Because Joyce, Inc. and Finnigan Corporation were themselves sellers of tangible property, the impact of these decisions on the sale of intangible property is not as widely discussed. However, it should be. This article will provide a brief background of the Joyce and Finnigan decisions and also discuss the general rules for sourcing sales of tangible and intangible property.