In recent years, taxpayers have been confronted with an ever changing sea of definitions, tests and analyses with respect to nonbusiness income claims. From statutory changes to seemingly more frequent adverse court decisions, taxpayers are increasingly confronted with statutes that have been drafted, or interpreted, to narrow the scope of what constitutes nonbusiness income. In fact, many of the recent court decisions classifying gains as nonbusiness income have come from states that amended their statutes after the tax years involved in the cases.
Although initially 26 states adopted the language of the Uniform Division of Income for Tax Purposes Act ("UDITPA") definition of "business income,"1 state legislatures, often in response to favorable court decisions for taxpayers, have slowly changed their statutory definitions of business income by: (i) providing that "business income" is all income apportionable under the U.S. Constitution;2 (ii) modifying the UDITPA definition to provide that "business income" includes income from tangible and intangible property if the acquisition, management or disposition of the property constitutes integral parts of the taxpayer's regular trade or business;3 or (iii) in the case of Pennsylvania, incorporating the changes in both (i) and (ii).4 Currently, approximately half of the original 26 states have retained the traditional UDITPA definition of business income. Despite these statutory changes and recent adverse court decisions, nonbusiness income claims remain viable and continue to be valuable weapons in a taxpayer's arsenal.
This article begins by identifying and analyzing the most common statutory changes designed to expand the definition of "business income," followed by a survey of recent case law involving nonbusiness income claims under both the traditional UDITPA definition and the modified definitions. Finally, this article concludes by providing a framework for analyzing nonbusiness income claims in this continually-evolving landscape.
Recent Statutory Changes
Since the adoption of UDITPA, many state legislatures have sought to broaden the amount of income that is apportionable to their state by changing the definition of business income, primarily in one of the following three ways:
Establishing a Disjunctive Functional Test
In the 1990s, Tennessee and New Mexico changed their statutory definitions of business income to provide for a disjunctive definition under the functional test, so that their statutes now refer to the "acquisition, management or disposition" of property.5
Similarly, in 2001, the Alabama Legislature enacted a new statute to define "business income" in an attempt to legislatively overrule Ex parte Uniroyal Tire Co.6 In Uniroyal Tire, the Alabama Supreme Court held that the UDITPA definition of business income provided for a transactional test only and that a company's liquidation of its entire partnership interest was nonbusiness income as "[a] complete liquidation and cessation of business do[es] not generate business income under the transactional test . . . because, by definition, such events are most extraordinary; they do not occur in the regular course of the taxpayer's trade or business."7
Although the UDITPA definition of business income was left intact, for taxable years beginning after December 31, 2001, the new statute provides in relevant part that:
"[B]usiness income" means income arising from transactions or activity in the course of the taxpayer's trade or business; or income from tangible or intangible property if the acquisition, management, or disposition of the property constitute integral parts of the taxpayer's trade or business operations; or gain or loss resulting from the sale, exchange, or other disposition of . . . tangible or intangible personal property, if the property while owned by the taxpayer was operationally related . . . to the taxpayer's trade or business . . . ; or gain or loss resulting from the sale, exchange, or other disposition of stock in another corporation if the activities of the other corporation were operationally related to the taxpayer's trade or business . . . . 8
U.S. Constitutional Standard
In recent years, several states, including Iowa (effective in 1995), Illinois (effective in 2004), Kansas (effective in 2008), North Carolina (effective in 2002) and West Virginia (effective in 2007), and the District of Columbia (effective in 2004), have amended their definitions of "business income" to provide that "business income" is "all income that is apportionable under the United States Constitution."9
Although Minnesota repealed the UDITPA definition of business income in 1987, based on the fact that the statute continued to provide for the allocation and apportionment of income based on whether the income was derived from carrying on a trade or business, the Minnesota Supreme Court, in Firstar Corp. v. Commissioner of Revenue, applied the transactional test and held that income from the sale of the taxpayer's headquarters building was nonbusiness income. In reaching its decision, the court looked to: (i) the frequency and regularity of similar transactions; (ii) former business practices; and (iii) the subsequent use of the proceeds.10
In response to Firstar, the Minnesota Legislature enacted a definition of nonbusiness income, effective for tax years beginning after December 31, 1998, defining "nonbusiness income" as all "income of the trade or business that cannot be apportioned by [Minnesota] because of the United States Constitution . . . includ[ing] income that cannot constitutionally be apportioned to [Minnesota] because it is derived from a capital transaction that solely serves an investment function."11
In 2001, the Pennsylvania Legislature took a somewhat unique approach and amended its definition of business income by changing the "and" to an "or" in the functional test and adding a provision stating that business income also includes all income that is apportionable under the U.S. Constitution. Currently, "business income" is defined in Pennsylvania as:
[I]ncome arising from transactions and activity in the regular course of the taxpayer's trade or business and includes income from tangible and intangible property if either the acquisition, the management or the disposition of the property constitutes an integral part of the taxpayer's regular trade or business operations. The term includes all income which is apportionable under the Constitution of the United States.12
Of particular importance, the enacting legislation (the "2001 Act") provided that: (i) the intent of the amendment was to "clarify existing law;" and (ii) the statutory changes applied retroactively to tax years beginning after December 31, 1998.13
The 2001 Act was passed largely in response to the Pennsylvania Supreme Court's decision in Laurel Pipe Line Co. v. Commonwealth, in which the court held that gain from the sale of an idle pipeline, which the court found to be a liquidation of a discrete segment of the company's business, was not business income under either the transactional or the functional tests.14 In reaching its decision, the court emphasized that the functional test required that "the acquisition, management, and disposition of the property constitute integral parts of the taxpayer's regular trade or business operations" to be considered business income.15
Recent Case Law Developments
In In re Kimberly-Clark Corp. v. Dep't of Revenue, the Alabama Supreme Court sustained the Department of Revenue's argument that gain from the taxpayer's sale of real estate was nonbusiness income because the sale was "most extraordinary (and did) not occur in the regular course of the taxpayer's trade or business."16 In reaching its determination, the court relied on Uniroyal and affirmed that the state's statute, as in effect prior to 2002, provided for only a transactional test.17
Similarly, in Kansas, in In re The Appeal of Chipotle Mexican Grill, Inc., under the definition of business income that was in effect prior to 2008, the Kansas Court of Tax Appeals applied only the transactional test in finding that gain resulting from an initial public offering ("IPO") was nonbusiness income because the IPO stock sale was not in the regular and ordinary course of the taxpayer's business operations.18 In reaching its decision, the court noted that Kansas applied a transactional test to determine whether income is business income and that "[t]he controlling factor in the transactional test for the determination of business income is the nature of the particular transaction giving rise to the income."19
In Crystal Communications, Inc. v. Department of Revenue, the Oregon Tax Court found that income from the sale of FCC licenses could satisfy the functional test and, therefore, be classified as business income, if the licenses were an integral part of the taxpayer's trade or business at the time of the disposition.20 In reaching its decision, the court noted that the Oregon Supreme Court recognized the existence of a functional test that is independent from the transactional test and that, if the taxpayer were required to have been engaged in a business that regularly disposed of the type of property in question to satisfy the functional test, the functional test would be "completely redundant or duplicative of the transactional test."21
Shortly after its decision in Crystal, the Oregon Tax Court held, in CenturyTel, Inc. v. Department of Revenue, that the gain from the sale of stock of a unitary subsidiary, which was treated as a deemed asset sale pursuant to Internal Revenue Code ("IRC") Section 338(h)(10), was business income.22 Because of the IRC Section 338(h)(10) election, the court explained that the transaction was properly viewed as a disposition of assets and held that the gain was apportionable business income based on its analysis in Crystal. Although the court noted that Crystal established that there was no liquidation exception to the functional test in Oregon, the court concluded that, because CenturyTel used the proceeds of the sale to continue and expand its existing operations, the gain would have constituted business income even if there were a liquidation exception.23
Case Law Developments Under the New Definitions of Business Income
In Newell Window Furni shing, Inc. v.Johnson, the first case to interpret Tennessee's amended, disjunctive definition of business income, the Tennessee Court of Appeals held that the gain resulting from a deemed asset sale pursuant to IRC Section 338(h)(10) was business income because "[t]he proper question under the functional test is not whether the disposition of the property was an integral part of the corporation's regular business, but rather, whether the property disposed of was an integral part of the corporation's regular business."24 As it was undisputed that the assets that were deemed to have been sold were an integral part of the taxpayer's regular business, the court found that the gain was business income.25
Subsequently, in Blue Bell Creameries, LP v. Roberts, the Tennessee Supreme Court held that capital gain from the taxpayer's one-time acquisition and sale of stock as part of a reorganization was business income.26 The court observed that, in reaching its decision in Newell, the Court of Appeals "clarified that the determinative issue of the functional test is not whether the disposition of the property is an integral part of the taxpayer's regular trade or business operations but whether the property being disposed of constitutes an integral part of the taxpayer's regular trade or business."27
In analyzing whether the stock at issue was "integral" to the taxpayer's regular trade or business, the court explained that the term "integral" has multiple definitions, including "of, relating to, or serving to form a whole," "essential to completeness," or "organically joined or linked."28 Noting that these meanings are not interchangeable and that, as such, the precise meaning of the phrase was uncertain, the court looked to other courts' decisions for guidance.29 As the capital gain at issue was generated from the acquisition and sale of stock (i.e., an investment) and not from the sale of tangible assets, the court looked for guidance in Union Carbide Corp. v. Offerman30 and Hoechst Celanese Corp. v. Franchise Tax Board,31 both of which involved gains from investments. The Tennessee Supreme Court explained that, under the North Carolina analysis, in order for property to be "integral" the "property must be â€Üessential to [the] completeness' of the taxpayer's regular trade or business."32 In contrast, the court explained that, under California's approach, property is "integral" if "the taxpayer's control and use of the property . . . contribute materially to the taxpayer's production of business income so that the property becomes interwoven into and inseparable from the taxpayer's business."33
The Tennessee Supreme Court ultimately agreed with the finding and analysis in Hoechst because it found that "[t]his approach appropriately includes earnings from property that allows the taxpayer's business operations to prosper while excluding earnings from property that is incidental or unrelated to the taxpayer's business operations."34 Applying this standard, the court held that the functional test was satisfied because Blue Bell's acquisition and sale of the stock at issue was a necessary step in the reorganization and resulted in increased earnings from the sale of Blue Bell ice cream in Tennessee and elsewhere.
Based on the functional test articulated in Blue Bell, the Tennessee Court of Appeals, in H.J. Heinz Co. v. Chumley, found that passive income in the form of dividends from a partnership interest constituted business earnings because the income allowed the taxpayer's business operations to prosper.35
In Glatfelter Pulpwood Co. v. Commonwealth, the Pennsylvania Commonwealth Court held that a taxpayer's sale of timberland generated business income under the functional test because the sale was part of the management or disposition of property constituting an integral part of the taxpayer's regular trade or business operations.36 The taxpayer's business was to procure pulpwood for its parent company, which was engaged in the manufacture of specialty papers and engineered products.37 The taxpayer owned timberland in four states, including Delaware.38 In 2004, pursuant to a divestiture plan, the taxpayer sold approximately 25% of its timberland in Delaware.39 All of the net proceeds from the sale were distributed to the parent, which used the entire amount to pay debt and to pay dividends to its shareholders.40
The taxpayer argued that, because the 2001 Act was intended to "clarify" existing law, cases such as Laurel Pipe Line that were decided prior to the amendment were still precedential.41 In response, the Department of Revenue argued that the Legislature's statement was an improper attempt to interpret the tax code and noted that, in Canteen, the Commonwealth Court referred to the language in the 2001 Act as an "amended definition," and therefore, the 2001 Act legislatively overruled Laurel Pipe Line and eliminated any argument that an asset that produced business income could result in nonbusiness income upon its disposition.42
Without resolving the issue of retroactivity, the court distinguished Laurel Pipe Line on the facts and found that the sale of timberland did not meet the liquidation exception articulated in Laurel Pipe Line because the taxpayer continued to own substantial timberland acreage in Delaware and its regular business continued.43
In a footnote, the court observed that, because it had distinguished the case from Laurel Pipe Line on the facts, it did not need to address the issue of whether the 2001 Act resulted in a change or a clarification, but the court did assert that Canteen had "held" that the 2001 Act was an amendment and that any attempt by the Legislature to interpret the tax code is beyond the Legislature's power.44
Importantly, the court did not address the Department of Revenue's assertion that "[w]hile the present statute embodies the functional and transactional tests, the practical effect is that Pennsylvania has expanded the definition of business income to the extent permissible under the constitution of the United States."45
In Tate & Lyle Ingredients Americas, Inc. v. Department of Revenue, the Alabama Circuit Court, without opinion, granted the taxpayer's motion for summary judgment and thereby upheld the determination of the Chief Administrative Law Judge ("ALJ") that gain from the sale of a subsidiary was nonbusiness income.46 In reaching his determination, the ALJ noted that the Alabama Legislature amended the definition of business income in 2001 to expressly provide for both a transactional and a functional test, as well as a third "operationally-related" test.47 Applying the amended definition, the ALJ held that the sale of stock that the taxpayer had held for 45 years was an infrequent transaction that was not in the taxpayer's regular course of business and therefore, clearly was not business income under the transactional test.48 The ALJ further explained that the gain was not business income under the functional test because the taxpayer and the subsidiary "operated totally separate and independent businesses" and that "[t]he [t]axpayer's purchase, ownership, and/or sale of the . . . stock had nothing to do with the [t]axpayer's business in Alabama or elsewhere."49 The ALJ then explained that the operationally-related test reflects a statutory adoption of the constitutional operational-function test discussed by the U.S. Supreme Court in Allied-Signal, Inc. v. Director, Div. of Taxation and that, to be classified as business income, the statutory test requires that the activities of the corporation from which the taxpayer derived the gain must have been operationally-related to the taxpayer's trade or business.50 Interestingly, Tate & Lyle was decided before the U.S. Supreme Court's decision in MeadWestvaco v. Illinois Department of Revenue, but after the Court had granted certiorari.51 Although the ALJ concluded that the U.S. Supreme Court's holding in MeadWestvaco would not affect the outcome of Tate & Lyle, the ALJ distinguished the unitary business test from the operational function test and found that the state's statute encompassed only the operational function test.52
In Minnesota, despite a legislative bulletin stating that the definition of nonbusiness income "is intended to void the definition of nonbusiness income of Firstar,"53 the Minnesota Tax Court, in Nadler v. Commissioner of Revenue, applied the factors set forth in Firstar in holding that income from a 2001 sale of stock in an S-corporation that was treated as a deemed sale of assets pursuant to IRC Section 338(h)(10) was nonbusiness income.54 As an initial matter, the Tax Court rejected the Minnesota Department of Revenue's assertion that the amended definition of nonbusiness income established a purely constitutional standard for Minnesota's apportionment rules because the court found that such a standard would essentially nullify the statutory provisions concerning income not derived from a trade or business.55 Applying the Firstar factors, the court held that the gain was nonbusiness income because: (i) there was no frequency or regularity of similar transactions because the gain from the deemed sale of assets was an isolated transaction in the corporation's history; (ii) based on the taxpayer's former business practices, the corporation was not engaged in the business of selling corporate stock or assets; and (iii) looking at the subsequent use of the proceeds showed that the proceeds were distributed to the taxpayer's shareholders in a deemed liquidation and were not reinvested in the corporation.56
Framework for Classifying Gain Going Forward
Even in the face of the recent statutory changes, however, a state's power to tax is not absolute and gains must satisfy certain criteria before they can be classified as apportionable business income. For example, in states that have modified the UDITPA definition of business income to provide for a disjunctive functional test, the asset must still be an integral part of the taxpayer's trade or business to generate business income upon its sale or disposition. Thus, as demonstrated in Tate & Lyle, where income results from the sale of an asset that was not integral to the taxpayer's trade or business, the income is properly classified as nonbusiness income.57
A central issue under these new statutes, therefore, is what constitutes "integral." Although the California Supreme Court's analysis of the functional test in Hoescht has led to a line of case law in California and in other states, such as Tennessee and Oregon, that interpret the functional test as requiring a showing that the property sold contributed materially to the taxpayer's production of business income "so that the property becomes interwoven into and inseparable from the taxpayer's business," this interpretation is arguably so broad that it essentially equates the functional test with the constitutional, unitary business requirement.58 The states' legislatures, in adopting the UDITPA definition of business income rather than a constitutional standard, have demonstrated an intent to distinguish between income that is apportionable under the U.S. Constitution pursuant to the unitary business principle and income that is apportionable under the business income standard; if a state's legislature had intended to impose a purely constitutional standard, it could statutorily adopt such a standard or it could implicitly adopt a constitutional standard by simply not creating a statutory distinction between business and nonbusiness income.59
Also, as the Tennessee and California Supreme Courts have acknowledged, there are multiple definitions of the word "integral."60 The definition of "integral" as "essential to completeness" that was adopted by the North Carolina Supreme Court in Union Carbide arguably provides a better standard against which to classify gain than the "contribute[s] materially" standard applied by the courts in California and Tennessee because "essential to completeness" is a standard dictionary definition and, therefore, implements the common and ordinary understanding of the word in accordance with fundamental rules of statutory construction. Further, unlike the "contributes materially" standard, the "essential to completeness" standard does not include, for example, surplus assets or assets that are no longer necessary or essential to the business, but which may have generated business income at some point.61 Thus, "essential to completeness" provides a narrower standard that preserves the distinction between the statutory standard for business income and the constitutional standard for income from a unitary business.
Another flaw in the reasoning of Hoechst and the cases that adopt its analysis is that they completely ignore the nature of the transaction and focus exclusively on the relationship of the asset to the taxpayer's business.62 Based on the plain language of the functional test "acquisition, management, or disposition of the property constitute integral parts of the taxpayer's regular trade or business operations" the nature of the transaction is relevant to an analysis under the functional test.
Furthermore, although unique to Pennsylvania, in Glatfelter, by distinguishing Laurel Pipe Line on the facts rather than finding that the case had been legislatively overruled by the 2001 Act, the Commonwealth Court left open the possibility that it would continue to recognize the liquidation exception articulated in Laurel Pipe Line.63 Moreover, as the 2001 Act states that the amendment to the definition of business income is intended to clarify existing law, Laurel Pipe Line and similar cases interpreting the definition of business income prior to the statutory change arguably should continue to be precedential authority. The Pennsylvania Supreme Court has previously considered clarifying legislation and found that "[s]ince the purpose was to serve as a clarification of the existing language, we cannot infer any intent to change the existing meaning of the law."64 Further, the Pennsylvania Supreme Court has noted that "[t]he General Assembly has directed in the Statutory Construction Act . . . that the object of interpretation and construction of all statutes is to ascertain and effectuate the intent of the General Assembly."65
Additionally, "[a]nother bedrock principle of statutory construction requires that a statute be construed, if possible, to give effect to all its provisions, so that no provision is mere surplusage."66 The Pennsylvania Department of Revenue's assertion that the statute's "practical effect" is to define business income as income apportionable to the extent permissible under the U.S. Constitution ignores this principle of statutory construction and renders nugatory the statutory provisions regarding the transactional test and the functional test.
Finally, even in those states that have adopted the constitutional standard for apportionment of income, the U.S. Supreme Court has made it clear that the Due Process and Commerce Clauses of the U.S. Constitution mandate that a state may not, when imposing an income or franchise tax, "tax value earned outside its borders."67 In MeadWestvaco, the Court reaffirmed the applicability of the unitary business principle in analyzing the extent of a state's taxing power.68 Thus, although in those states that have adopted a constitutional standard it may be more difficult to successfully assert a nonbusiness income claim with respect to certain types of transactions conducted in a state, even these states are not free to apportion all income; gains from the sale of an asset that is not unitary with the taxpayer's trade or business remain nonapportionable under Allied Signal and MeadWestvaco.69
1 UDITPA defines "business income" as: [I]ncome arising from transactions and activity in the regular course of the taxpayer's trade or business [the "transactional test"] and includes income from tangible and intangible property if the acquisition, management and disposition of the property constitute integral parts of the taxpayer's regular trade or business operations [the "functional test"]. MTC art. IV. Â§ 1(a).
2 See, e.g., D.C. Code Â§ 47-1810.02 (effective 2004); Iowa Code Â§ 422.32(1)(b) (effective May 1, 1995); 35 Ill. Comp. Stat. Â§ 5/1501(a)(1) (effective July 30, 2004); Kan. Stat. Ann. Â§ 79-3271 (effective January 1, 2008); Minn. Stat. Â§ 290.17 (effective for tax years beginning after December 31, 1998); N.C. Gen. Stat. Â§ 105-130.4 (effective January 1, 2002); W.V. Code Â§ 11-24-3a(a)(2) (effective March 10, 2007).
3 See, e.g., Ala. Code Â§ 40-27-1.1 (effective for tax years beginning after December 31, 2002); Miss. Code Ann. Â§ 27â€'7â€'23(a)(2) (effective for tax years beginning on or after January 1, 2001); N.M. Stat. Ann. Â§ 7-4-2(A) (effective for the 1999 and subsequent tax years); Tenn. Code Ann. Â§ 67-4-2004(4), previously codified as, Tenn. Code Ann. Â§ 67-4-804(a)(1) (effective for tax years ending on or after July 15, 1993).
4 See 72 Pa. Stat. Â§ 7401(3)2(a)(1)(A) (effective June 22, 2001, retroactive to tax years beginning after December 31, 1998).
5 See Tenn. Code Ann. Â§ 67-4-2004(4), previously codified as, Tenn. Code Ann. Â§ 67-4-804(a)(1); N.M. Stat. Ann. Â§ 7-4-2(A).
6 779 So. 2d 227 (Ala. 2000); see Act 2001-1113, HB7, 4th Spec. Sess. (Ala. 2001)(stating that the bill "would provide further for the definition of â€Übusiness income' for purposes of the Multistate Tax Compact in order to overrule the Alabama Supreme Court decision in Uniroyal Tire Company v. Alabama Department of Revenue").
7 779 So. 2d 227 (Ala. 2000).
8 Ala. Code Â§ 40-27-1.1.
9 Iowa Code Â§ 422.32(1)(b); 35 Ill. Comp. Stat. Â§ 5/1501(a)(1); Kan. Stat. Ann. Â§ 79-3271; N.C. Gen. Stat. Â§ 105â€'130.4; W.V. Code Â§ 11-24-3a(a)(2).
10 575 N.W.2d 835 (Minn. 1998).
11 Minn. Stat. Â§ 290.17 Subd. 6.
12 72 Pa. Stat. Â§ 7401(3)2.(a)(1)(A) (emphasis added).
13 HB 334, 2001-02 Leg., 185th Sess. (Pa. 2001).
14 642 A.2d 472 (Pa. 1994).
15 Id. (emphases in original).
16 No. 1070925 (Ala. 2010), with related at 69 So. 3d 144 (Ala. 2010), subsequent decisions regarding requests by the taxpayer for the court to hear constitutional arguments denied at No. 2100811 (Ala. Civ. Ct. of App. Feb. 17, 2012) (holding that the circuit court correctly denied the taxpayer's motion to remand the action to the Administrative Law Judge for resolution of the taxpayer's constitutional arguments because the Supreme Court had determined that the income was nonbusiness income) (internal quotations and citation omitted).
18 No. 2009-9077-DT (Kan. Ct. of Tax App. Oct. 21, 2010).
19 Id. (quoting In re The Appeal of The Kroger Co., 12 P.3d 889 (Kan. 2000) (internal quotations omitted)).
20 No. TC 4769 (Or. T.C. July 19, 2010). In Crystal and CenturyTel, infra, the statute at issue was Oregon Revised Statutes Section 314.280, which specifically relates to the allocation of income of financial institutions and public utilities and which incorporates by reference the regulations regarding the definition of business income. Although the UDITPA definition of business income is found in these regulations, the Tax Court in Crystal noted that Section 314.280 predated Oregon's adoption of the UDITPA definition and therefore, rejected the idea that the regulations should be construed under UDITPA principles. Despite this finding, the court nevertheless determined that the gain was also business income under the UDITPA definition.
21 Id. (internal quotes omitted).
22 No. TC 4826 (Or. T.C. Aug. 9, 2010).
23 With the exception of decisions in California and Tennessee, see infra, the Oregon Tax Court's decision in CenturyTel is inconsistent with decisions involving IRC Section 338(h)(10) elections, which have "consistently found that gains derived from deemed asset sales are considered â€Ünonbusiness' income." See, e.g., McKesson Water Products Co. v. Div. of Tax., 974 A.2d 443 (N.J. Super. Ct. App. Div. 2009); see also Nicor Corp. v. Dep't of Revenue, Nos. 1-07-1359 & 1-09-1591 (Ill. App. Ct. Dec. 5, 2008); Chambers v. State Tax Comm'n, No. 050402915 (D. Utah Jan. 25, 2007), vacated by joint motion, No. 2007-467-SC (Ut. 2008); ABB Câ€'E Nuclear Power, Inc. v. Dir. of Revenue, 215 S.W.3d 85 (Mo. 2007); Canteen Corp. v. Commonwealth, 854 A.2d 440 (Pa. 2004); Commonwealth v. Osram Sylvania, Inc., 863 A.2d 1140 (Pa. 2004).
24 311 S.W.3d 441 (Tenn. Ct. of App. 2008). 25 Id.
26 333 S.W.3d 59 (Tenn. 2011).
27 Id. citing to Newell.
28 Id. citing to Webster's Third New Int'l Dictionary, 1173 (1993).
30 526 S.E.2d 167 (N.C. 2000).
31 22 P.3d 324 (Cal. 2001).
32 Blue Bell, 333 S.W.3d 59 (citing to Union Carbide).
33 Id. (quoting and citing Hoechst, 22 P.3d 324) (internal quotations omitted).
35 No. M2010-00202-COA-R3-CV (Tenn. Ct. App. June 28, 2011).
36 19 A.3d 572 (Pa. Commw. Ct. 2011), application for oral arguments before the Pa. Supreme Ct. granted (Mar. 26, 2012).
41 Petitioner's Brief, pg. 21-22.
42 Respondent's Brief, pg. 15-16.
43 Glatfelter, 19 A.3d at 578-80.
44 Id. Although the court stated that in Canteen it had "held" that the statutory change was an amendment, the only discussion of the 2001 Act in Canteen is in two footnotes, both of which describe the changes to the definitions of business and nonbusiness income as "amendments" without any discussion of whether the 2001 Act was a clarification or amendment. Canteen, 818 A.2d at 598 fns. 9, 10.
45 Respondent's Brief, pg. 24.
46 No. CORP. 07-162 (Admin. Law Div. Jan. 15, 2008), reaffirmed after petition for rehearing (June 23, 2008), motion for summary judgment pursuant to Rule 56 granted No. CV-2008-900755 (Ala. Cir. Ct. Aug. 4, 2009).
53 1999 Minn. Legis. Bull.: Corporate Franchise Tax, Minn. Dep't of Revenue.
54 No. 7736R (Minn. Tax Ct. Apr. 21, 2006).
57 See Tate & Lyle, No. CORP. 07-162.
58 See Hoescht, 22 P.3d 324.
59 See Reynolds Metals Co., LLC v. Dep't of Treasury, No. 300001 (Mich. Ct. App. Mar. 20, 2012), unpublished opinion not precedentially binding (applying the constitutional unitary business standard to determine whether capital gain from the sale of a subsidiary was apportionable in Michigan under the Single Business Tax Act, which did not provide a distinction between business and nonbusiness income); see also Nadler, No. 7736R (stating that "to infer a definition of business income that would establish purely constitutional limits to Minnesota's apportionment rules would allow the general provision [defining nonbusiness income] to vitiate the particular provision found in [the provision regarding allocation of income not derived from [the] conduct of a trade or business]," which would be "[e]ffectively concluding that the gain on a sale of assets associated with a business is never subject to allocation [as income not derived from a trade or business], [and] would violate the rule of construction providing that â€Üthe legislature intends the entire statute to be effective and certain'").
60 See Blue Bell, 333 S.W.3d at 66; Hoechst, 22 P.3d at 339-40.
61 See Blue Bell, 333 S.W.3d at 68; Hoechst, 22 P.3d at 340-44; Union Carbide, 526 S.E.2d at 171.
62 See Hoechst, 22 P.3d at 339.
63 See Glatfelter, 19 A.3d at 578-80.
64 Commonwealth v. Rosenbloom Fin. Corp., 325 A.2d 907 (Pa. 1974) (discussing a proposed legislative revision that was not reported out of committee).
65 Commonwealth v. Gilmour Mfg. Co., 822 A.2d 676 (Pa. 2003) (internal citations omitted).
66 Id. (internal citations and quotations omitted).
67 ASARCO Inc. v. Idaho State Tax Comm'n, 458 U.S. 307, 315 (1982).
69 See, e.g., Reynolds Metal, No. 300001 (Mich. Ct. App. Mar. 20, 2012).
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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