>RIVER GARDEN
RETIREMENT HOME v.
FRANCHISE TAX BOARD
Filed 7/15/10
>CERTIFIED FOR PUBLICATION
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
FOUR
RIVER
GARDEN RETIREMENT HOME,
Plaintiff and Appellant,
v.
FRANCHISE
TAX BOARD,
Defendant and Respondent.
A123316
(San
Francisco City
and County
Super. Ct.
No. CGC07-467783)
For
years Revenue and Taxation Code[1]
section 24402 allowed California
corporate taxpayers to deduct a portion of the dividends they received from
another corporation when those dividends were included in the payer's measure
of California franchise, income
or alternative minimum tax. The court in
Farmer Bros. Co. v. Franchise Tax Board
(2003) 108 Cal.App.4th 976, 980, 986-987 (Farmer
Bros.) held that section 24402 violates the commerce clause of the United
States Constitution by allowing the dividends received deduction where the
dividend-paying corporation was subject to California tax, but disallowing it
where such corporation was not subject to California tax.
Appellant
River Garden Retirement Home (River Garden or the company) claimed the
dividends received deduction for tax years 1999 and 2000, but, in the wake of >Farmer Bros., respondent Franchise Tax
Board (FTB) disallowed the deductions for tax years ending on or after December
1, 1999, and issued notices of proposed assessment for additional tax for the
two years at issue in this case. As
well, the FTB imposed an amnesty penalty under California's
tax amnesty program[2]
because River Garden
did not pay the tax deficiencies announced in those notices until two years
after the close of the amnesty period.
Section 19777.5, subdivision (a)(2) subjects eligible taxpayers, such as
River Garden, who did not participate in the amnesty program to a penalty on
amnesty-eligible deficiency assessments that remain â€
Description | For years Revenue and Taxation Code[1] section 24402 allowed California corporate taxpayers to deduct a portion of the dividends they received from another corporation when those dividends were included in the payer's measure of California franchise, income or alternative minimum tax. The court in Farmer Bros. Co. v. Franchise Tax Board (2003) 108 Cal.App.4th 976, 980, 986-987 (Farmer Bros.) held that section 24402 violates the commerce clause of the United States Constitution by allowing the dividends received deduction where the dividend-paying corporation was subject to California tax, but disallowing it where such corporation was not subject to California tax. |
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