Dental Insurance Consultants, Inc. v. Franchise Tax Board

The State Franchise Tax Board (Board) appeals from the trial court’s summary judgment directing that it refund additional franchise taxes and interest paid by Dental Insurance Consultants, Inc., (DIC) for the tax years 1980, 1981, and 1982. The court determined that DIC and its wholly owned subsidiary D.I.C. Farms, Inc., (Farms) were engaged in a unitary enterprise and their net incomes should be combined for franchise tax purposes. We affirm.

Most of the relevant facts are set out in the opinion of the State Board of Equalization from which we quote.

“DIC is a California corporation which provides review and advice regarding dental insurance claims for various insurance companies. Its headquarters is located in Saratoga, California, and it has additional offices in California, several other states, and Canada. Each office has two dentists who coordinate the efforts of dentists who have been engaged, as subcontractors, to assist in reviewing and making recommendations regarding these claims. During the appeal years, DIC enjoyed significant profits.

“The president and majority shareholder of DIC was Richard Guenther. Its vice-president was Ernest Giachetti, and its…