Extract to table

merging subsidiaries into VeloPay or converting entity types), which may yield state tax savings through reduced filing obligations and franchise tax costs, though such restructuring must be carefully sequenced to preserve tax attributes and avoid unintended adverse consequences

To the extent these entities are treated as separate entities for state tax purposes (rather than disregarded or included in a combined return), their nexus positions must be independently evaluated

In states that adopt a water's-edge combined reporting approach (such as California), the domestic affiliates of VeloPay are included in the combined report while the foreign affiliates are excluded, but intercompany transactions at the water's edge must be at arm's length and may be subject to adjustment

VeloPay must elect a deduction method to compute its taxable margin

and PayStream Gateway LLC — will be commonly owned by HPE Fund IV and must be included in a single combined Texas margin tax report

This combined reporting requirement is likely already in effect for VeloPay and its subsidiaries under their current ownership structure, but the change in ultimate parent to HPE Fund IV raises the question of whether other HPE Fund IV portfolio entities must also be included