Toys

State: California

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

Docket No: C045386M

Case Date: 07/26/2006

Preview:Filed 5/4/06

CERTIFIED FOR PUBLICATION

COPY
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento) ---TOYS "R" US, INC., et al., Plaintiffs and Appellants, v. FRANCHISE TAX BOARD, Defendant and Respondent. ORDER MODIFYING OPINION, DENYING REQUEST FOR PARTIAL DEPUBLICATION OF OPINION, AND DENYING REHEARING [NO CHANGE IN JUDGMENT] THE COURT: It is ordered that the opinion filed herein on April 5, 2006, be modified as follows: 1. On page 20, the first full paragraph, beginning with "As the FTB concedes," is deleted and the following paragraphs are inserted in its place: As the FTB concedes, no California appellate court has addressed the question of who has the burden of proof under section 25137. However, several State Board of Equalization (SBE) cases have determined that the party seeking to deviate from the statutory allocation formula bears the burden of proving the use of the normal formula does not fairly represent the extent of the taxpayer's activity in California. (Appeals of Bank of Tokyo (SBE 1995) Westlaw, 1995 WL 671975; Appeal of Aimor Corp. (SBE 1983) Westlaw, 1983 WL 15592; Appeal of California First Bank (SBE 1985) C045386 (Super. Ct. No. 01AS04316)

1

Westlaw, 1985 WL 15830; Appeal of New York Football Giants, Inc. (SBE 1977) Westlaw, 1977 WL 3825.) For the reasons expressed below, we conclude the FTB has met this burden. The SBE has noted that showing distortion in the standard formula is a difficult hurdle to overcome. However, "Section 25137 must be analyzed on a case-bycase basis; there is no bright line rule that determines when the standard formula does not adequately deal with a particular situation. However, our prior opinions reveal five examples of unusual fact situations that may trigger section 25137: [

Download Toys