Minnesota LLC Alternative Apportionment
The Minnesota Supreme Court recently held In Associated Bank, N.A. and Affiliates v. Commissioner of Revenue, Minn., that the revenue commissioner could apply an alternative apportionment method to include the interest from two affiliated limited liability companies (“LLCs”) loans in the sales factor, as well as the pro rata basis and the value of the two LLCs' loans in the property factor.
The Court’s decision in Associated Bank, highlights the potential ability of taxpayers to aggressively structure (or restructure) their businesses for tax savings. However, while taxpayers can structure their business to allow for tax savings, most important is that taxpayer’s structure fairly represents its business in the state as Minnesota may assert alternative apportionment methods..