Alpha Therapeutic Corp. v. Franchise Tax Board

Alpha Therapeutic Corporation (Alpha) appeals from summary judgment granted in favor of defendant Franchise Tax Board of the State of California (FTB) on Alpha’s complaint for a refund of over $950,000 in franchise taxes paid for four consecutive fiscal years ending September 30, 1993. The dispositive issue, and one apparently of first impression, is whether Revenue and Taxation Code section 33 (section 33) affords Alpha an exemption from franchise taxes. Section 33 provides: “Human whole blood, plasma, blood products, and blood derivatives, or any human body parts held in a bank for medical purposes, shall be exempt from taxation for any purpose.”

Factual and Procedural Background

The parties stipulated to the following undisputed facts: Alpha is a California for-profit corporation with headquarters in Los Angeles; Alpha is owned by Yoshitomi Pharmaceutical Industries, Ltd., Japan’s tenth largest pharmaceutical company. Since 1978, Alpha has been in the business of processing, distributing, and selling human plasma, blood products, and blood derivatives (the blood business). Alpha is one of the world’s top five plasma component manufacturers; over a four-year fiscal…