When does the application of the unitary principle generally benefit the taxpayer?

The unitary principle benefits a taxpayer primarily in situations where it allows for a more efficient allocation of income and expenses among affiliated entities within a group. This principle is designed to give a more accurate representation of the overall business operations of a multinational or multistate enterprise.

In the context of the question, the application of the unitary principle typically does not favor the taxpayer when there are net operating losses from other affiliates or when those affiliates operate in low-tax states. Instead, it often allows states to tax a greater share of the overall income of a unitary group when some members generate losses or operate in lower-tax jurisdictions.

When other affiliates within the unitary group generate net operating losses, those losses may not necessarily benefit the overall tax situation for the group, as they could lower the overall taxable income. Similarly, if affiliates are operating in low-tax states, it could dilute the state tax liability for the entire group, often leading to a higher aggregate tax burden when forming a consolidated return across higher-tax states.

Overall, the unitary principle typically benefits the taxpayer when there are opportunities for income averaging or when affiliates can offset profits in higher-tax jurisdictions reflecting a more accurate economic reality of the enterprise. In this case, the context indicates that neither scenario would