A breakthrough in water's-edge unitary legislation

California's controversial unitary business tax has been amended. The previous law required all multistate and multinational corporations doing business in California to file combined corporate returns. The new law introduces the so-called 'water's edge' concept, which allows certain foreign corporations to be excluded from the combined return. Procedures for electing a worldwide or water's edge basis are discussed. The rules for election fees, the treatment of foreign dividend income, interest-offset, and domestic disclosure are discussed.