Tenneco West, Inc. v. Franchise Tax Board

Plaintiff Tenneco West, Inc. appeals the portion of a judgment after court trial favoring defendant Franchise Tax Board of the State of California (the Board) on Tenneco’s complaint for refund of franchise taxes paid. Tenneco contends the court should have found Tenneco and certain of its subsidiaries (the Tenneco Excluded Subsidiaries) constituted a single unitary business for franchise tax purposes.

The Board appeals the portion of the judgment favoring Tenneco. The Board contends the court should have apportioned the tax on Tenneco’s installment sale gains on the basis of factors existing in the year of sale rather than in the year of receipt of each installment payment.

We affirm the portion of the judgment favoring the Board on the unitary business issue. We reverse the portion of the judgment favoring Tenneco on the installment sale issue.

I

Tenneco’s Appeal

A

Factual and Procedural Background

For the years 1973 through 1976 (the years in issue) Tenneco’s subsidiaries filed returns and paid tax under California’s Bank and Corporation Tax Law.

In 1979 Tenneco filed amended returns and claims for refunds for the years in issue, asserting Tenneco and its…