William Lyon Co. v. Franchise Tax Board

The William Lyon Company (Lyon) appeals a judgment denying its claim for solar energy system tax credits under California statutes and regulations as they existed in 1982, asserting it met all of the requirements for such tax credits. For the following reasons, we affirm the judgment.

Factual and Procedural Background

In 1982, Lyon constructed numerous tract homes in seven developments within California. The houses were built according to various standard plans without consideration of whether they qualified for solar energy system tax credits. A few years later, a consultant determined Lyon could qualify for tax credits for some of these houses after reviewing the plans, maps, and selected sites of actual houses in Lyon’s 1982 developments. Based upon his recommendation and calculations, Lyon filed an amended 1982 California income tax return requesting a refund based upon solar energy system tax credits for which it allegedly qualified. Lyon claimed credits of $116,376 for the costs of installing excess south-facing windows, entry floor tile, and kitchen countertop tile in certain of its homes.

When the Franchise Tax Board (FTB) denied Lyon’s request,…