On May 20, 2025, California’s Franchise Tax Board (“FTB”) released changes to the proposed regulations (“Draft Regulations”) that would amend the rules regarding market-based sourcing for sales other than sales of tangible personal property.  This is the latest step by the FTB in the long-running process toward formally adopting the amendments first approved in 2016, which we described in a September 2024 blog post when FTB released an updated draft of the amendments. 

These latest changes include a change to the effective date of the proposed regulations from taxable years beginning on or after January 1, 2025 to taxable years beginning on or after January 1, 2026.  Additionally, the changes include revisions to methods to overcome certain presumptions and to substantiate the location where the benefit of a service is received.  The revised Draft Regulations retain the changes that clarify that the location of the benefit of service is presumed to be received in California when the service relates to real property in the state, tangible property in the state, intangible property used in the state, and individuals present in the state.    

FTB will accept written comments regarding the new modifications until June 5.

Posted in Tax Policy, Tax Reform
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Photo of Robert A. Friedman Robert A. Friedman

Robert Friedman is a partner in the Tax Department whose practice focuses on representing clients in all facets of corporate and partnership related tax matters. In particular, Robert provides tax advice on public and private mergers, acquisitions, joint ventures, divestitures, private equity fund…

Robert Friedman is a partner in the Tax Department whose practice focuses on representing clients in all facets of corporate and partnership related tax matters. In particular, Robert provides tax advice on public and private mergers, acquisitions, joint ventures, divestitures, private equity fund formation, financial products and electric and gas utility tax issues.

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Photo of Amanda H. Nussbaum Amanda H. Nussbaum

Amanda H. Nussbaum is the chair of the Firm’s Tax Department as well as a member of the Private Funds Group. Her practice concentrates on planning for and the structuring of domestic and international private investment funds, including venture capital, buyout, real estate…

Amanda H. Nussbaum is the chair of the Firm’s Tax Department as well as a member of the Private Funds Group. Her practice concentrates on planning for and the structuring of domestic and international private investment funds, including venture capital, buyout, real estate and hedge funds, as well as advising those funds on investment activities and operational issues. She also represents many types of investors, including tax-exempt and non-U.S. investors, with their investments in private investment funds. Business partners through our clients’ biggest challenges, Amanda is a part of the Firm’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team helping to shape the guidance and next steps for clients impacted by the pandemic.

Amanda has significant experience structuring taxable and tax-free mergers and acquisitions, real estate transactions and stock and debt offerings. She also counsels both sports teams and sports leagues with a broad range of tax issues.

In addition, Amanda advises not-for-profit clients on matters such as applying for and maintaining exemption from federal income tax, minimizing unrelated business taxable income, structuring joint ventures and partnerships with taxable entities and using exempt and for-profit subsidiaries.

Amanda has co-authored with Howard Lefkowitz and Steven Devaney the New York Limited Liability Company Forms and Practice Manual, which is published by Data Trace Publishing Co.

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Photo of Muhyung (Aaron) Lee Muhyung (Aaron) Lee

Muhyung (Aaron) Lee is a partner in the Tax Department. Aaron works predominantly on U.S. federal corporate, partnership and international tax matters that include advising on mergers and acquisitions, fund formation, financial products and financing transactions.

Before joining Proskauer, Aaron was an associate…

Muhyung (Aaron) Lee is a partner in the Tax Department. Aaron works predominantly on U.S. federal corporate, partnership and international tax matters that include advising on mergers and acquisitions, fund formation, financial products and financing transactions.

Before joining Proskauer, Aaron was an associate at Davis Polk & Wardwell LLP in New York. Before attending law school he worked in finance at Société Générale and Bank of America Merrill Lynch.

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Photo of Mitchell Gaswirth Mitchell Gaswirth

Mitchell M. Gaswirth is a partner in the Tax Department. His practice focuses primarily on income, gift and estate tax and related business planning. Mitchell counsels individuals, entrepreneurs and business entities in connection with the myriad income and other tax issues arising in…

Mitchell M. Gaswirth is a partner in the Tax Department. His practice focuses primarily on income, gift and estate tax and related business planning. Mitchell counsels individuals, entrepreneurs and business entities in connection with the myriad income and other tax issues arising in sophisticated business transactions.

Mitchell’s practice also encompasses a wide array of merger and acquisition, business formation and financing, debt restructuring, and real property acquisition, disposition and exchange transactions. His knowledge encompasses the complex and often arcane application of California’s property tax regime (“Proposition 13”) in a variety of business transactions directly or indirectly involving California real property.

In addition, he provides income, gift and estate tax and related business planning advice to individuals, families, and their business enterprises to help them achieve wealth preservation and tax minimization objectives. This planning includes tax minimization strategies involving grantor trusts, family limited partnerships, charitable and family “split interest” and other irrevocable trusts, and other sophisticated wealth transfer and business succession vehicles. Mitchell’s wealth transfer tax planning practice focuses particularly on counseling executives, professionals, investors, and others concerning the preservation, administration and disposition of their capital. He also counsels individuals and businesses in connection with planning to minimize California income tax burdens.

Mitchell also represents corporate and individual fiduciaries, and estate and trust beneficiaries, in a wide array of sophisticated personal planning and fiduciary administration matters, including representing U.S. Trust, JPMorgan Chase Bank and Wells Fargo Bank, in their administrations of complex trust arrangements for high net worth families. His fiduciary practice also encompasses substantial “Family Office” representation for multi-member families seeking to achieve complex and sophisticated income and wealth transfer tax objectives.

Mitchell’s tax practice also involves the administrative and judicial resolution of tax disputes with federal and state tax authorities. He represents taxpayers in income, estate and gift, sales and use, property, and employment tax disputes with the Internal Revenue Service, California Franchise Tax Board, and other tax authorities. Notably, Mitchell served as Lead Tax Counsel to the late Paul Newman, both at trial and in the California Court of Appeals, in the actor’s successful refund suit against the California Franchise Tax Board. The Newman case established the impropriety of the Franchise Tax Board’s formula for apportioning to California a non-resident entertainer’s income derived from both California and non-California sources.

Prior to joining Proskauer, Mitchell was a partner of the Los Angeles law firm Mitchell, Silberberg & Knupp.

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Photo of Maggie Livingstone Maggie Livingstone

Maggie Livingstone is an associate in the Tax Department and a member of the firm’s Corporate Tax and Employee Benefits & Executive Compensation practice groups. She earned her B.A. with Honors from Brown University and her J.D. from USC Gould School of Law.

Maggie Livingstone is an associate in the Tax Department and a member of the firm’s Corporate Tax and Employee Benefits & Executive Compensation practice groups. She earned her B.A. with Honors from Brown University and her J.D. from USC Gould School of Law. In law school, she was a Senior Editor of the Southern California Law Review and a legal writing fellow.

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