John Deere Co. v. Franchise Tax Board

Additional franchise taxes were assessed to plaintiff for the income years October 31, 1946, through October 31, 1951, and were paid under protest. Plaintiff seeks to recover $68,679.88 of the amount so paid, asserting it to be chargeable only to a sibling corporation. Judgment was for defendant, and plaintiff appeals.

Plaintiff (Moline) and John Deere Killefer Company (Killefer) do business in California. They are but two of a large number of corporations wholly owned by Deere and Company. The parent corporation, through its many subsidiaries, operates nationwide. The California franchise tax liability of this group was the subject of earlier litigation by plaintiff, under its then corporate name. In 1951, the Supreme Court denied recovery of taxes paid under protest for the income year 1937 (John Deere Plow Co. v. Franchise Tax Board, 38 Cal.2d 214 [ 238 P.2d 569 ], app. dism. 343 U.S. 939 [ 72 S.Ct. 1036 , 96 L.Ed. 1345 ]). The operations of parent and subsidiaries were held to constitute a unitary business, with income attributable to California for franchise tax purposes being determined by allocation under formula.

Respondent then commenced recomputation of taxes on…