Robinson

Defendant Franchise Tax Board (board) appeals from judgments entered after the court found in plaintiffs’ (taxpayers) favor on contested tax amounts and ordered refunds. The cases are consolidated.

The primary issue we consider is whether taxes paid by the James C. Campbell trust, a Hawaii trust, to the State of Hawaii are “on or according to or measured by income or profits” (Rev. & Tax. Code, § 17204, subd. (c)(2)), which determines whether they may be deducted in computing the California income tax upon the trust. We conclude that as to some of its applications, the Hawaii tax is “on or measured by income or profits” and as to other applications it is not, but that the taxpayers have failed to carry their burden of proving which of the taxes paid, if any, fall within the deductible applications of the Hawaii tax. We reverse the judgment.

Facts

The facts are essentially contained in a stipulation of facts.

The taxpayers are beneficiaries of a trust resulting from the estate of James C. Campbell, who died in Hawaii in 1906. The trust has approximately $400 million of assets and approximately 150 beneficiaries. The trust is quite active in the State of Hawaii,…