Navistar, Inc. v. Testa (Slip Opinion)
143 Ohio St. 3d 460
| Ohio | 2015Background
- Ohio enacted the 2005 CAT to replace the franchise and personal-property taxes for industrials like Navistar.
- Navistar seeks a CAT credit intended to preserve value of its net operating losses (NOLs) carried forward.
- Navistar’s 2007 restatement increased its valuation allowance to 100%, offsetting NOLs and reducing CAT credit to zero.
- Navistar argued the tax commissioner had no statutory authority to adjust the credit based on post-deadline accounting changes.
- The commissioner argued R.C. 5751.53(D) authorizes adjustments reflecting GAAP corrections discovered after filing.
- The Board of Tax Appeals (BTA) affirmed the commissioner; Navistar challenged the GAAP-compliance of the original valuation allowance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to adjust amortizable amount after deadline | Navistar contends no statutory authority post-deadline to adjust. | Commissioner may adjust for accuracy under R.C. 5751.53(D). | Commissioner may adjust if restatement corrects an error under GAAP. |
| GAAP compliance of the original valuation allowance | Original allowance was GAAP-compliant; restatement merely reflected a later estimation. | Restated allowance shows correction of earlier GAAP noncompliance. | Key factual issue: whether original allowance complied with GAAP; remand to resolve. |
| Effect of post-deadline restatement on the CAT credit | Restatement after deadline should not impact the June 2006 amortizable amount. | Restatement can correct the accuracy of the amortizable amount. | Restatement may be used to correct the amortizable amount if GAAP correction. |
| Use of Navistar admissions (SEC filings, Illinois complaint) to prove GAAP issues | Navistar admissions support non-GAAP original valuation. | Admissions are admissible evidence of issues; BTA can weigh them. | On remand, the Illinois complaint and admissions are not binding; weight to be reassessed. |
Key Cases Cited
- Beaver Excavating Co. v. Testa, 134 Ohio St.3d 565 (2012-Ohio-5776) (context for CAT reform and tax transitions)
- Grover v. Bartsch, 170 Ohio App.3d 188 (2006-Ohio-6115) (interlocutory orders merge into final judgment)
- Household Fin. Corp. v. Porterfield, 24 Ohio St.2d 39 (1970) (waiver/abandonment concepts in appellate briefing)
- In re Columbus S. Power Co., 129 Ohio St.3d 271 (2011-Ohio-2638) (standards for corporate tax/valuation discussions)