ILNews

Tax Court rejects company’s claim it was a passive investor

Back to TopCommentsE-mailPrintBookmark and Share

A mobile telecommunications group was unable to convince the Indiana Tax Court Tuesday that it was entitled to summary judgment on the issue of whether it should have received a refund for paid adjusted gross income tax.

Vodafone Americas Inc. and Vodafone Holdings LLC, incorporated in Delaware, appealed the denial of its claim for refund for taxable years ending March 31, 2005-2008. Vodafone asked the Tax Court to answer whether the income it received as a partner of a general partnership with Cellco, which did business as Verizon Wireless in Indiana, was income derived from sources within Indiana.

Vodafone sought the tax refund because it believed it had erroneously attributed a portion of its income to Indiana. Indiana Code requires it to pay a tax on the part of its adjusted gross income derived from sources within Indiana. Since it is not commercially domiciled in Indiana, Vodafone contended that its income – dividends it received from investing in Cellco – is not derived from sources within the state and therefore not taxable.

“The critical question is whether the income Vodafone received as a partner of Cellco had the character of operational income or investment income because if it was operational income, it was not income in the form of ‘dividends from investments’ under Indiana Code § 6-3-2-2(g),” Senior Judge Thomas Fisher wrote in Vodafone Americas Inc. and Vodafone Holdings LLC v. Indiana Dept. of State Revenue, 49T10-1002-TA-7.

“The mere fact that Vodafone was a partner in a general partnership gives its income from that partnership the character of operational income. As such, Vodafone’s income is not income in the form of ‘dividends from investments’ under Indiana Code § 6-3-2-2.2(g).”

Vodafone argued that despite the fact it was in a general partnership, a “lack of control” placed it in essentially the same position as being a limited partner of, or a true “passive investor” in Cellco. But Vodafone participates in Cellco’s management by appointing members to the board of representatives, by appointing Cellco’s chief financial officer and it holds certain veto rights regarding business.

“Consequently, Vodafone’s ‘lack of control’ by reason of its minority interest is insufficient to show that it does not participate in the management of Cellco and thus that it was a mere ‘passive investor’ in Cellco,” Fisher wrote. He denied summary judgment and noted the court will schedule a case management conference by separate order. The appeal presented an unspecified alternative issue that wasn’t addressed in the summary judgment motion, which can now proceed to trial.

 

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. I can understand a 10 yr suspension for drinking and driving and not following the rules,but don't you think the people who compleate their sentences and are trying to be good people of their community,and are on the right path should be able to obtain a drivers license to do as they please.We as a state should encourage good behavior instead of saying well you did all your time but we can't give you a license come on.When is a persons time served than cause from where I'm standing,its still a punishment,when u can't have the freedom to go where ever you want to in car,truck ,motorcycle,maybe their should be better programs for people instead of just throwing them away like daily trash,then expecting them to change because they we in jail or prison for x amount of yrs.Everyone should look around because we all pay each others bills,and keep each other in business..better knowledge equals better community equals better people...just my 2 cents

  2. I was wondering about the 6 million put aside for common attorney fees?does that mean that if you are a plaintiff your attorney fees will be partially covered?

  3. I expressed my thought in the title, long as it was. I am shocked that there is ever immunity from accountability for ANY Government agency. That appears to violate every principle in the US Constitution, which exists to limit Government power and to ensure Government accountability. I don't know how many cases of legitimate child abuse exist, but in the few cases in which I knew the people involved, in every example an anonymous caller used DCS as their personal weapon to strike at innocent people over trivial disagreements that had no connection with any facts. Given that the system is vulnerable to abuse, and given the extreme harm any action by DCS causes to families, I would assume any degree of failure to comply with the smallest infraction of personal rights would result in mandatory review. Even one day of parent-child separation in the absence of reasonable cause for a felony arrest should result in severe penalties to those involved in the action. It appears to me, that like all bureaucracies, DCS is prone to interpret every case as legitimate. This is not an accusation against DCS. It is a statement about the nature of bureaucracies, and the need for ADDED scrutiny of all bureaucratic actions. Frankly, I question the constitutionality of bureaucracies in general, because their power is delegated, and therefore unaccountable. No Government action can be unaccountable if we want to avoid its eventual degeneration into irrelevance and lawlessness, and the law of the jungle. Our Constitution is the source of all Government power, and it is the contract that legitimizes all Government power. To the extent that its various protections against intrusion are set aside, so is the power afforded by that contract. Eventually overstepping the limits of power eliminates that power, as a law of nature. Even total tyranny eventually crumbles to nothing.

  4. Being dedicated to a genre keeps it alive until the masses catch up to the "trend." Kent and Bill are keepin' it LIVE!! Thank you gentlemen..you know your JAZZ.

  5. Hemp has very little THC which is needed to kill cancer cells! Growing cannabis plants for THC inside a hemp field will not work...where is the fear? From not really knowing about Cannabis and Hemp or just not listening to the people teaching you through testimonies and packets of info over the last few years! Wake up Hoosier law makers!

ADVERTISEMENT