F. W. Woolworth Co. v. Franchise Tax Board

This appeal poses the issue of whether F. W. Woolworth Co. (Woolworth U.S.), a New York corporation doing business in California, was engaged in a unitary business with F. W. Woolworth Co., Limited (Woolworth Canada), a Canadian corporation, during the years 1961 through 1964. The case has its genesis in tax assessments made by the State of California Franchise Tax Board, based on its determination that appellant Woolworth U.S. and Woolworth Canada were engaged in a unitary business during the years in question. For practical purposes, this tax decision meant that Woolworth would be required to pay California taxes on income earned by Woolworth Canada as well as Woolworth U.S., because of the determination that the two companies were not really separate but rather were “unitary” in their operation and in their economic impact on the State of California.

After pursuing appropriate administrative remedies, appellant brought this action for a refund of taxes paid pursuant to the respondent board’s determination. The court below determined that the two Woolworths were engaged in a unitary enterprise and were properly treated as such for California franchise tax purposes.…