Bunzl Distribution USA, Inc. v. Franchise Tax Bd.

*648 Plaintiff Bunzl Distribution USA, Inc. (Bunzl), a multinational entity comprised of numerous subsidiary corporations and limited liability companies (LLC), appeals from the trial court's judgment upholding defendant Franchise Tax Board's (FTB) determination that Bunzl owed $1,403,595 in taxes to the State of California for the year 2005 under the Uniform Division of Income for Tax Purposes Act (UDITPA) ( Rev. & Tax. Code, § 25120 et seq. ). 1 Bunzl contends the judgment must be reversed because the FTB should have excluded property, payroll, and sales factors from Bunzl's LLC's in calculating its California tax liability under UDITPA. We reject Bunzl's contention and affirm the judgment.

I. BACKGROUND

A. UDITPA

The United States Constitution prohibits states from taxing income earned outside their borders. ( Container Corp. v. Franchise Tax Bd . (1983) 463 U.S. 159 , 164, 103 S.Ct. 2933 , 77 L.Ed.2d 545 ( Container Corp. ).) "However, it permits taxation of 'an apportionable share of the multistate business carried on ... in the taxing State' [citation] and grants states some leeway in separating out their respective shares of this multistate income, not mandating they use…