Microsoft Corp. v. Franchise Tax Bd. 2/28/05 CA1/3

State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: A105312

Case Date: 06/09/2005

Preview:Filed 2/28/05 Microsoft v. Franchise Tax Bd. CA1/3

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE

MICROSOFT CORPORATION, Plaintiff and Respondent, v. FRANCHISE TAX BOARD, Defendant and Appellant. (City and County of San Francisco Super. Ct. No. 400444) A105312

Following an audit of its 1991 tax return, Microsoft Corporation paid an additional assessment and pursued this action seeking a refund. The matter was tried to the court based on stipulated facts, with additional oral and documentary evidence presented at trial. The court ruled in favor of Microsoft. We reverse. The parties' dispute centers around the characterization for tax purposes of the gross proceeds from Microsoft's transactions in marketable securities. Microsoft claims these proceeds must be included in its "gross receipts" for purposes of the apportionment prescribed by the Uniform Division of Income for Tax Purposes Act (UDITPA, Rev. & Tax. Code,

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