Fidelity National Info. Services v. Franchise Tax
Fidelity National Information Services, Inc. (Fidelity) appeals from a judgment entered in favor of the Franchise Tax Board after a bench trial on Fidelity’s complaint for a refund of taxes. On appeal, Fidelity contends: (1) the trial court erred when it ruled that capital gains from the sale of its stock in Covansys Corporation was business income subject to tax by California and (2) treating the gains as business income violates the due process clauses of the California and federal Constitutions. With respect to the first issue, we agree with Fidelity that the court erred when it failed to address Fidelity’s argument that, even if the Covansys stock was an integral part of Fidelity’s business operations at one time, it was a nonbusiness investment long before it was sold. We reject Fidelity’s other challenges to the trial court’s determination. We need not reach Fidelity’s constitutional argument because we reverse and remand for further proceedings.
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