Standard Register Co. v. Franchise Tax Board

This is an appeal by defendant from judgment, after court trial, in favor of plaintiff in the sum of $112,486.65, being refund of portions of franchise taxes for income years 1956 through 1959.

Questions Presented

1. This court is not bound by the trial court’s conclusions on undisputed facts.

2. Plaintiff was conducting a single unitary operation as its Pacific division was not operated as an independent unit.

3. Applying the three-factor apportionment formula to Standard's net national income is not arbitrary.

Record

For the years 1956 through 1959, defendant assessed franchise taxes against plaintiff on the theory set forth in plaintiff’s tax returns that plaintiff was conducting a single unitary business, including the operation of its Pacific division. Accordingly, income from California sources was ascertained by comparing California property, payroll and sales for the entire business and applying the average of the resulting ratios to the company’s total net income.

In 1961 plaintiff filed refund claims seeking an adjustment of its franchise tax for the years 1956 through 1959 by applying the tax formula to each of two separate business incomes, that is, to the…