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A unitary business is a type of business that has subsidiaries in other states or countries The term is applied to a flow either between multiple entities that are related through common ownership or within a single legal entity, and without regard to whether each entity is a sole proprietorship, a corporation, a partnership, or a trust When calculating its state income tax, the business determines what portion of a subsidiary's income is attributable to activities within the state and pays taxes on that percentage.
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Comm'r of revenue, 658 n.w.2d 859, 865 (minn Unitary business means business activities or operations which result in a flow of value between them 2003), the court held that a business is unitary when the operation of the business within the state is dependent upon or contributory to the operation of the business outside the state.
Business activities which might otherwise be considered as part of more than one unitary business may constitute one unitary business when there is a strong central management, coupled with the existence of centralized departments for such functions as financing, advertising, research, or purchasing.
The court went on to hold that when companies are a unitary business, the individual entities have “no meaningful existence.” the individual entities that make up the unitary group cease to be separate taxpayers and only one taxpayer remains—the unitary business group Instant unity requires a critical analysis when a business acquires another entity or acquires the assets of another entity, questions arise as to whether the combined entities are unitary and when the unitary relationship begins There are many considerations to being unitary as well as planning opportunities Businesses should understand the ramifications prior to a merger.
