McA Inc. And Universal City Studios, Inc. v. American Broadcasting Companies, Inc., and United States of America

MCA appeals the district court’s dismissal of its suit for a declaratory judgment. MCA and Universal produced films for ABC’s television broadcasts. They now contest which corporation(s) should reap the benefit of the investment tax credit. ABC and the United States maintain that an action for declaratory judgment in this case will not lie. The district court so ruled and we affirm.

I.

During the tax years 1971 through 1974, MCA produced the 31 films at issue here. ABC exhibited these films under license. Both ABC and MCA claimed investment tax credits for the films. Both elected, pursuant to § 804(e)(2) of the Tax Reform Act of 1976, Pub.L. No. 94-455, 90 Stat. 1520, to have their claims determined in accordance with § 48(k) of the Internal Revenue Code of 1954.

The IRS determined that MCA should receive the investment tax credits. ABC’s tax credits were disallowed. After paying the tax resulting from the disallowed tax credits, ABC filed a tax refund action in the Court of Claims, alleging that it, and not MCA, was entitled to the investment tax credits.

MCA learned of ABC’s lawsuit and filed this declaratory action, seeking a judicial determination that it, and not ABC, is…