ILNews

Justices reverse Tax Court ruling favoring Caterpillar

Back to TopCommentsE-mailPrintBookmark and Share

The Indiana Supreme Court Monday reversed a Tax Court ruling that favored Caterpillar Inc., holding the company could not deduct foreign-source dividend income when calculating its net operating losses for the years 2000 through 2003 for Indiana tax purposes.

The Indiana Department of Revenue rejected Caterpillar’s foreign-source dividend deduction and reduced its net operating loss by about $8.3 million. The company appealed to the Indiana Tax Court, where it prevailed. http://www.theindianalawyer.com/judge-rules-in-favor-of-caterpillar-in-tax-deduction-dispute/PARAMS/article/31095 The department then appealed.

“At its core, the resolution of this case is straightforward: The Indiana (net operating loss) statute does not reference or incorporate the  foreign source dividend deduction, and the Tax Court clearly erred in holding that it did,” Loretta Rush wrote in her first opinion as chief justice, Indiana Department of State Revenue v. Caterpillar, Inc., 49S10-1402-TA-79.

“The Department correctly recognized that the Indiana tax statutes did not authorize Caterpillar to include foreign source dividend income in its Indiana NOL calculation. We also conclude that Caterpillar has not met its burden to show the Indiana tax statutes unconstitutionally discriminate against foreign commerce,” Rush wrote for the unanimous court.

The case was remanded to the Tax Court with instructions that summary judgment be entered on behalf of the Department of Revenue and denied to Caterpillar.

The court in a footnote said the department argued that allowing the Tax Court ruling to stand would produce millions of dollars in lost revenue for the state. However, the court granted Caterpillar’s motion to strike an affidavit that confirmed the precise magnitude of the fiscal impact because it was not designated as evidence before the Tax Court. Therefore, the Supreme Court could not rely on it when reviewing the Tax Court’s decision.

"(W)e hold that the Tax Court clearly erred when it adopted a false symmetry between Indiana (adjusted gross income) and Indiana NOLs, and we decline Caterpillar’s effort to apply the foreign source dividend deduction to its NOL calculations," the court held.



 
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Oh my lordy Therapist Oniha of the winexbackspell@gmail.com I GOT Briggs BACK. Im so excited, It only took 2days for him to come home. bless divinity and bless god. i must be dreaming as i never thoughts he would be back to me after all this time. I am so much shock and just cant believe my eyes. thank you thank you thank you from the bottom of my heart,he always kiss and hug me now at all times,am so happy my heart is back to me with your help Therapist Oniha.

  2. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  3. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  4. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  5. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

ADVERTISEMENT