With new legislation being proposed on a regular basis, corporations are constantly forced to determine what impact these changes will have on their tax liability, both for the current year and future years. Will the change help or hurt their overall tax position? A corporate tax department might attempt to model the impact of proposed legislation, but because of time constraints and modeling complexity, they can usually offer little more than a very high-level estimate of the overall impact. These rough estimates are usually limited in scope and potentially inaccurate. Traditional solutions, such as spreadsheets or compliance systems, are simply not capable of performing the full-scale analysis required.

Liquid Engines STx enables tax departments to efficiently and accurately model new legislation with a simple, parameter-based approach that automatically handles the complicated business logic for calculations such as NOL carry-forwards, check-the-box treatments, and sales throwback. By using STx, tax professionals will spend less time building and maintaining spreadsheets and more time evaluating and analyzing results. Leveraging STx, corporations can fully understand the multi-year impact of legislative changes such as:

State Changes to Net Operating Loss (NOL) Deduction Rules
Some states have changed their NOL deduction rules to either put a moratorium on utilization in place or otherwise limit the utilization of NOLs. With STx, users can change the NOL generation and utilization rules to reflect proposed NOL changes and analyze the effect on their state tax liability.

State Changes to Apportionment Formulae and Factor Calculations
In the current fiscal climate, many states have made changes to the apportionment factor or apportionment rules. STx tax rules are fully customizable, enabling customers to model changes to factor weights and throwback rules, and to define the apportionment accounts included in the factor calculations.

STx also offers robust “what if” apportionment modeling capabilities for industries with unique fourth-factor apportionment methods. Examples of specific industry measurements include:

• Revenue miles, revenue tons, takeoffs/landings, and tons handled for transportation;
• Subscribers and audience size for broadcast; 
• Banking receipts and deposits for financial services;
• Barrels and pipeline traffic units for energy.

State Disallowance of Intercompany Transactions for Intangibles
The current and proposed Anti-Passive Investment Company (PIC) expense disallowance for intercompany royalty and interest transactions requires that companies be able to model these disallowance rules. STx allows customers to modify the state disallowance rules for intercompany transactions to model the expense disallowance.

State Changes to Flow-Through Entity Treatment
States have different treatments for partnerships based on the type of partnership, the type of partner, and whether the partner and partnership are unitary. With STx, customers can easily change the partnership rules to analyze the impact on their state tax liability when the state proposes a change to check-the-box treatment or to how income is treated (allocated or apportioned) in specific situations.

States Decoupling from Federal Bonus Depreciation
Many states have decoupled from the Federal Bonus Depreciation that began as part of the Job Creation and Worker Assistance Act of 2002 (JCWAA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). A few states have unique add-back and recapture rules for the federal bonus depreciation. STx customers can analyze the yearly impact of the various state rules on their multi-year scenario and get a clear picture of how timing differences caused by varying state rules will affect their state tax liability on a multi-year basis.

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