Georgia State and Local Tax (SALT) Alerts

State and Local Tax Insights

Georgia State and Local Tax Alert – Canadian Company Exempt from GA Income Tax and Foreclosure Sale Qualifies as Arm’s Length Sale

  • The Georgia Dept. of Revenue ruled that a Canadian company exempt from paying U.S. federal income tax under the Canada-U.S. Treaty has no taxable income for purposes of the Internal Revenue Code and effectively has no GA taxable net income for it to be subject to GA income tax. The company only has a fixed place of business in Canada, has no assets or inventory in the U.S., and doesn’t have employees in the U.S. Its only activity conducted in the U.S. is the solicitation of sales through the sales agents of a related company. (GA Letter Ruling No. LR IT-2018-01)
  • A foreclosure sale qualifies as an arm’s length sale. The Georgia Court of Appeals affirmed a trial court’s holding that a 2015 bank foreclosure sale qualifies as an arm’s length, bona fide sale. Thus, the maximum allowable fair market value for 2016 tax assessment purposes was limited to the 2015 foreclosure purchase price. The Board of Assessors couldn’t appraise the properties at higher values by using the sales comparison approach. GA state law defines an arm’s length, bona fide sale as including a distressed sale, short sale or bank sale. (Dkt. No. A19A0516)

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