Business Income Generated in Other States Taxable in Pennsylvania

Taxes2The Pennsylvania Supreme Court recently ruled that income generated in Delaware by the sale of land in Delaware was in fact taxable as income in the state of Pennsylvania for a Pennsylvania pulpwood company.

In 2004, Glatfelter Pulpwood Company, a wholly owned subsidiary of P.H. Glatfelter Corp, sold several thousand acres of timberland located in Delaware. The company declared the revenue and paid the taxes owed in the state of Delaware. The Pennsylvania Department of Revenue denied Glatfelter’s claim that the net gain from the sale of the timberland was non-business income, thereby changing Glatfelter’s tax liability for the year. Glatfelter appealed the Department of Revenues decision and the case eventually worked its way to the Pennsylvania Supreme Court.

The Pennsylvania high court ruled that timberlands were “integral operational assets” of the timber business and could not be categorized as passive assets, despite the fact that the primary business activity of Glatfelter was buying and selling pulpwood, i.e. harvested trees, not buying, selling, or managing timberland.

If you are or have recently liquidated assets in another state and have questions about your liability in Pennsylvania, contact the Scolieri Law group today. Located in western Pennsylvania, the experienced attorneys at Scolieri Law Group, P.C. can answer these and other business law questions, including helping you find a business tax professional in your area if needed.  Contact us today at (412)765-0546 or