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ATTORNEYS FOR PETITIONER: TIMOTHY J. EIFLER WALTER L. SALES OGDEN NEWELL & WELCH, PLLC Louisville, KY

ATTORNEYS FOR RESPONDENT: STEVE CARTER ATTORNEY GENERAL OF INDIANA JOHN D. SNETHEN DEPUTY ATTORNEY GENERAL AMBER MERLAU ST.AMOUR DEPUTY ATTORNEY GENERAL Indianapolis, IN ________________________________________________________________________

IN THE INDIANA TAX COURT
________________________________________________________________________ CATERPILLAR FINANCIAL SERVICES CORPORATION, ) ) ) Petitioner, ) ) v. ) Cause No. 49T10-0311-TA-54 ) INDIANA DEPARTMENT OF ) STATE REVENUE, ) ) Respondent. ) ________________________________________________________________________ ORDER ON PETITIONER'S MOTION FOR SUMMARY JUDGMENT ________________________________________________________________________ FOR PUBLICATION September 12, 2005 FISHER, J. Caterpillar Financial Services Corporation (CAT) challenges the final determination of the Indiana Department of State Revenue (Department) holding that, for the 1996 and 1997 tax years (the years at issue), CAT was not subject to Indiana's Financial Institutions Tax (FIT) but was, instead, subject to Indiana's Gross Income Tax (GIT), Adjusted Gross Income Tax (AGIT), and Supplemental Net Income Tax (SNIT) (collectively, corporate income taxes). The matter is currently before the Court on CAT's motion for summary judgment.

While CAT raises several issues in its motion, one issue is dispositive: whether, during the years at issue, CAT was subject to the FIT. 1 FACTS The parties have stipulated to the following facts. CAT is a Delaware corporation domiciled in Tennessee. CAT is a wholly-owned subsidiary of Caterpillar, Inc. (Caterpillar), a Delaware corporation domiciled in Illinois. While Caterpillar and most of its subsidiaries are engaged in the manufacture and sale of heavy equipment (including construction and agricultural machinery, engines, and related equipment), CAT is primarily engaged in making loans and otherwise extending credit, through a variety of financing arrangements, to the worldwide customers of Caterpillar, as well as to Caterpillar's subsidiaries, local dealerships, and distributors. One of the primary financing arrangements CAT offers is the "finance

lease/conditional sale contract" (finance lease). In a typical finance lease, CAT purchases a piece of equipment from a Caterpillar dealer and simultaneously sells it to a customer via the finance lease agreement. Pursuant to the lease agreement, while possession of the

equipment is transferred directly from the Caterpillar dealer to the customer, CAT maintains legal title to the equipment. The lease agreement requires the customer to make monthly (or other periodic) rental payments to CAT and, at the end of the term of the lease, grants the

Specifically, CAT argues that because it was subject to the FIT during the years at issue, it was not subject to the corporate income taxes. See IND. CODE ANN.

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