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Handling State Apportionment Audits: Defending Methods and Throwback/Throwout Distributions

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Monday, February 26, 2024

Recorded event now available

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This webinar will prepare multistate tax practitioners and businesses for potential state apportionment audits. Our panel of state income tax veterans will review the latest developments in apportionment audits in particular states, explain differences in state sourcing methods, and discuss the application of throwback/throwout and the Joyce/Finnigan rules. They will offer concrete suggestions on selecting, documenting, and supporting apportionment allocations in anticipation of a state examination.


The number of state tax audits continues to escalate. California's Franchise Tax Board's website states that for assessments finalized during its 2022 fiscal year-end, "For corporation income and franchise taxes, the largest dollar amount in proposed assessments resulted from allocation and apportionment audits, which involves corporations doing business within and outside of California." The lucrative nature of these audits and the complexity and varying nature of state guidelines for apportionment dictate that the number of these examinations will continue to increase.

Apportionment is the act of attributing income by state for multistate entities. More and more states are adopting the sales factor as the only, or highest weighted factor, for assignment of income. Sales sourcing methods vary by state, with a majority favoring market-based sourcing while some use a cost of performance or another method. Some states have throwback rules insisting that sales not taxed by a state are allocated to the state where the sale originated. SALT practitioners and businesses must determine the most appropriate methodology for computing sales by state and be able to support and document this method in the event it is challenged by a state or state(s).

Listen as our panel of SALT experts explains best practices for calculating, documenting, and defending state apportionment methods.



  1. State Apportionment Audits – Introduction
  2. Apportionment methods
  3. Sourcing sales
    1. Services
    2. Tangible property
  4. Remote employees
  5. Reviewing income tax returns
  6. Apportionment workpapers
  7. Defending throwback and throwout allocations
  8. Joyce and Finigan rules
  9. Other considerations


The panel will cover these and other critical issues:

  • The status of state apportionment examinations in certain states
  • Preparing apportionment workpapers with potential audits in mind
  • Reviewing prior income tax returns for apportionment issues
  • Defending throwback and throwout allocations


Roberts, Stacey
Stacey L. Roberts, CPA

State and Local Tax Director

Ms. Roberts has been making state and local tax (SALT) less taxing for thousands of businesses over the last 25 years....  |  Read More

Smith, Meredith
Meredith Smith, CPA

Senior Tax Manager

Ms. Smith expertly weaves real-life examples into why business taxpayers, tax professionals, and tax providers should...  |  Read More

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