A more thorough explanation:

A throwback rule is a tax regulation that applies to trusts and sales. It has two different meanings:

In the taxation of trusts, a throwback rule requires that any amount distributed in a tax year that exceeds the year's distributable net income must be treated as if it had been distributed in the preceding year. This means that the beneficiary is taxed in the current year, but the computation is made as if the excess had been distributed in the previous year. If the trust did not have undistributed accumulated income in the preceding year, the amount of the throwback is tested against each of the preceding years.

For example, if a trust distributes $10,000 to a beneficiary in 2021, but the distributable net income for that year is only $8,000, the excess $2,000 will be subject to the throwback rule. The beneficiary will be taxed on the $2,000 as if it had been distributed in 2020, even though it was not actually distributed until 2021.

A throwback rule also applies to sales that would otherwise be exempt from state income tax. If the state to which the sale would be assigned for apportionment purposes does not have an income tax, even though the seller's state does, the sale must be attributed to the seller's state and subjected to a state-level tax. This rule only applies if the seller's state has adopted a throwback rule.

For example, if a company based in California makes a sale to a customer in Oregon, and Oregon does not have an income tax, the sale would normally be exempt from state income tax. However, if California has a throwback rule, the sale would be attributed to California and subject to California state income tax.