The Pillsbury Co. v. Franchise Tax Bd.

The Pillsbury Company (Pillsbury) appeals from a judgment granting the Franchise Tax Board’s (FTB) motion for summary judgment on Pillsbury’s complaint seeking a refund of California franchise taxes and interest for the income years June 1, 1985, to May 31, 1986, and June 1, 1986, to May 31, 1987. Pillsbury’s refund claim was based upon its assertion that California legislation, in 1987, adopted federal tax provisions that permitted Pillsbury to assign in excess of $168 million of its income to Alaska Native Corporation (ANC) subsidiaries in order to offset that income with the ANC’s net operating losses.

We shall affirm the judgment on the ground that the federal tax provisions that permitted Pillsbury’s assignment of income to the ANC subsidiaries were not adopted by California when it enacted legislation in 1987 that conformed many of California’s tax provisions to federal law. We therefore need not address the alternative ground stated by the trial court for granting the FTB’s motion for summary judgment; i.e., that the California legislation was effective only for taxable years beginning on January 1, 1987.

Facts

Pillsbury is a Delaware corporation, with its…