*1 TAX v. et al STATE COPPER CO. KENNECOTT COMMISSION. 2d, (221 857). Aug. 24, 1950. P. Decided
No. 7298. Rehearing denied Jan. 1951. *2 Taxation, See 61 C.J. computed Sec. 841. deducting Franchise tax after tax, See, federal Jur., A.L.R. 1457. also Am. 733. Parsons, C. C. MeCrea, W. M. A. Moffat, D. Calvin Behle, all of City, Salt Lake plaintiffs.
Wayne Christoffersen, City, Salt Lake for defendant. LATIMER, Justice. de- Tax to review a the State
Certiorari deficiency against assessing franchise a cision Copper Company. petitioner, Kennecott controversy developed before the This was State augmented agreed facts, an statement of as Commission on hearing. given testimony. at the a brief formal hearing largely scope limited in its and was was purpose explaining amplifying and the facts stated in argue stipulation, parties with the result necessary proper little over the facts. Insofar involved, determination issues facts are as follows: Copper Corporation
The Kennecott is a New York cor- doing poration business in this and other It states. owns operates Mine, Copper Bingham the Utah Railway Company Garfield and certain mills all located corporation this state. The franchise tax returns of the of the Utah with those company consolidated are railroad herein purposes and for all Copper Kenneeott Division of part of the transportation operations are included as operations. The from the Utah ores Copper Division Utah Magna Arthur to Kennecott’s Mine are carried Bingham Railway and there Garfield mills over arrangement with certain smelt- a contract milled. Under ing companies concentrates are then smelted and the mill smelting (blister copper) is then trans- product which are outside the Kenneeott to refineries ported any has no interest Kenneeott of Utah. any of the common carriers used to trans- or in smelters products state. port outside the The refined the smelted product for Kennecott’s account Kenneeott Sales is sold *3 subsidiary, wholly Corporation, owned one a and which agreed commission for receives an its services. Ken- extensive, large operations purchases quan- are it necott’s state, equipment supplies and in and tities of out of this engages pays the services of and a substantial num- and it employees operates. in states where it ber of year controversy, prior date to the in there had At some Mining operation of the Utah been a merged Kenneeott, effect, the affairs of the Utah Company However, Copper of other with those divisions. accounting system separate a was maintained for the Utah years Copper For the taxable 1985 Division. to 1941 in- clusive, the Utah Tax Commission and Kenneeott State had controversy proper method of proportion Copper of Kennecott’s Utah Division income proper allocated to the State Utah and over the determining the formula for amount to be allowed this corporation under the division franchise tax controversy pending that court, act. was While before this parties by stipu- a settlement was reached between the proceedings May lation were dismissed under date By 27, settlement, agreed 1942. that it was that 66.926 alone Copper percent Division of Kennecott’s Utah addition, the terms to this was to be allocated state. concerning questions Ken- agreement all of that settled liability for tax Copper Division franchise necott’s Utah years to 1941 inclusive. filed a franchise Subsequently, Division the Utah year paid it claimed 1942 and the amount return for the agreed upon using settlement by due the formula agreement years. Tax prior accept report the tax furnished Com- refused proposed certain pany of March letter adjustments opposed Kennecott. The which were improperly that Kennecott had com- Commission concluded deficiency liability puted the Utah Division’s tax and a imposed. assessment was petition filed a for redetermination
Kennecott alleged mining, petition, In the assessment. operation an processing, of metal was sale distribution single division; purpose of Kennecott and not of a that the company production refined of the was the and sale of metals; mining ores and their con- crude smelting accomplished centration and was within the State Utah; delivery refined their metals and accomplished wholly and distribution were sale outside state; indivisible; operation was that Kenne- wholly cott’s business within the State of Utah was inter- *4 character; any in intra- state that it had not transacted not, therefore, tax; subject state and was that business disallowing the action of the Tax Commission in the items pro- claimed in Kennecott’s return inwas violation of the 80, 13, Chapter 3, 6, visions of Title Re- Sections 7 and Utah, 1933; comput- vised Statutes of that the method ing by company by agree- the tax used had been settled ment between the commission and and that agreement; the return filed in Was accordance with this adjustments by proposed the State Tax Commis- arbitrary departure sion were and unreasonable and a from agreement; compromise the settlement and the com- estopped departing mission was from from the settlement agreement 1942; year in return its for agreed upon by Kenneeott had used the formula the com- promise agreement; and settlement and that its return was pursuant filed petition, formula. This filed in objections deficiency covered detail the made to the assessment, requests but no were made to allow the Utah change accounting Division to either method its or its manner of its allowance. dispute While number of items were called into before Commission, the State Tax the Commission concluded the taxpayer was entitled to certain claimed deductions and parties agreement assignment have or of error remaining limited the dispute allowances deductions in to three items. The first of these is whether the federal income tax must applying be deducted statutory before formula to determine the amount depletion. allowed for disputed The second question item involves the as to any income, net whether if derived transportation, smelting, refining selling, must be deducted from Utah Copper applying Division’s income before statutory applicable factor depletion. The third depends item upon subsidy whether payments made the federal government overproduction of ore must be included part Kennecott’s Utah Division income. findings, against ruled the tax- payer on all three disputed addition, items. compute refused to liability Kennecott’s tax changed on a accounting method of permit or to Kenneeott right percentage from a method of determin- ing depletion to a cost method or to a method specifi- not cally provided statute. It is from these adverse
145 rulings taxpayer appeals, court and in this that assignments disputed raises five of error which cover report rulings items in the Commis- the tax other prejudicial. ion claimed' The errors Kennecott to be assigned (1) are as follows: That the Tax Commission refusing requirements erred in to follow the of Section 80 —13—21, 1943, permit A. U. which would C. Kennecott proportionate part allocate to Utah a of its total distinguished allocating propor- from all sources part state; tionate of the Utah Division’s income this (2) permitting the State Tax Commission erred in not depletion; (3) Kennecott a reasonable allowance for that misinterpreted prescrib- commission Utah statutes ing percentage determining depletion; formula for discriminating Tax Commission erred in against Kennecott; (5) that Tax Commission erred in including paid the tax base subsidies to Kennecott government. the federal summarily dispose petitioner’s
We
contention.
last
substantially
question
Petitioner
tried
this same
United States District Court
the district
of Utah. On
appeal
Appeals
the Circuit Court of
the case
County
Copper Corporation,
Salt Lake
v. Kennecott
Cir.,
484,
10
paid
2d
163 F.
held
subsidies
government
properly
the federal
part
were
included as
gross proceeds
realized from the sales or conversion
Appeals
of ore.
pre
The Circuit Court of
relied on two
court, namely,
vious
decisions
this
United
Smelt
States
ing, Refining Mining
Haynes,
&
172,
111
Co. v.
Utah
622,
P. 2d
Company
and Combined Metals Reduction
v.
Commission,
156,
State Tax
111 Utah
Likewise, dispose petitioner’s contention that fed we applying eral not be deducted before the statu taxes need tory depletion formula to determine the allowance. Mining Company Tax In New Park v. Com State 486, passed mission, 196 P. 2d 113 Utah we question. WOLFE, speaking on the identical Mr. Justice court, disposed for the of the same contention in the follow ing language:
entitled to terminative statute, gross such as ‘gross shall be to determine or accrued within subsection The latter overlooked (b) “We stand certainly provides, 80 — gross income to determine income have plaintiffs by its 33% in flat compute provides, enumerates or of the heretofore net cannot be said per wholly * * * express U. C. A. 1943. The former contradiction terms of income. assert, case, cent of the the taxable depletion, before in order in ignored set for even if there were terms language less the deductions this court out, various equal clarity, to the clear making provides subsection net the essential year’ income, determine be which could ambiguous items income from the could not deducting are one of the their net (3) follows terms of the statute. he deducted from provisions argumnt allowed taxes statute permit federal income. And subsection of Section 80 —13—8. administrative hardly the allowance uncertain, shall property. such an defines net by taxes. plaintiffs items be made more of Section 80 —13—7 plaintiffs Section be deducted from to be deducted [*] interpretation interpretation for depletion gross have either This is [*] taxes 80 —13—8.’ income as Since the were not *” income clear, ‘paid That de- assignment proper disposition error, For a first necessary history it is to refer of Kennecott’s ac- counting by practice reporting and the method used it in the Utah Division to the Tax State Commission. inception corporation Since franchise tax act opera- Commission has considered the Utah separate tions of Kennecott as a and distinct unit for cor- poration purposes, tax franchise and so has Kennecott. kept principle corporate Its books are on that and all fran- returns, except dispute, chise the one pre- have been pared by receipts, and filed Kennecott on that basis. The expenditures, operation, costs of income and deductions treating are determined the Utah Mines Divisions as separate unit. This method must be used for certain purposes as the deduction to be allowed both agencies the federal and state must determined on the income from the located within this state and disputed franchise tax herein computed must be determining the amount of income allocated to the bus- iness transacted in this state. impractical It would be agencies both state and federal compli- to deal with the problems cated tax involved unless the affairs of the Utah *7 separable Division were from Kennecott’s other operations. Apparently filing Kennecott did not consider any tax on returns separate basis other than that of a operating present unit difficulty until the arose in subsequently and right change it asserted its to its method accounting for purposes franchise tax because it con- cluded the State Tax unfairly departed had principles from the compromise used in the settlement for previous years. However, the request change the for this appear does not grounds be included as one of the set petition forth in the and, for apparently, redetermination was not made until some time request in 1948. Had the granted been at that late date it would have a resulted in change accounting substantial procedure and would have complicated simplified and not already what was a difficult question. kept It must be in mind proposed the apportion did not seek to the income of the Utah alone, sought Division but to determine the net income assignable by pooling to this state all divisions of Kenne- applying cott and then prescribed formula statute.
Kennecott relies on Section U. A.C. 80— which deals with inclusion and exclusion of income re- ceived from within and without the state and which sets determining to this net income allocated
forth rules for determining provides for a method The section state. assignable within business done portion of net income rents, received from it mentions income state and this gains capital dividends, interest, from as- and sale respect sets, with certain definite rules forth sets determining provides a method of It then allocation. pre- of income allocated to this state remainder portion of the in- a scribes formula general requires way, a formula come so alloted. (1) pro- of the three factors: The value determination of compared perty in this state as to the value of located situated; (2) wages, property wherever amount of salaries, commissions, paid compared in this state as expenditures employees all the same made to wherever gross working; receipts assign- from business gross compared receipts able to state regardless of where all business transacted. provides as follows: paragraph the section
The last “(8) judgment ap- If in the tax commission foregoing plication does not to this rules allocate fairly equitably proportion of state state, may with such attributable to this information fairly as it be able to obtain make such allocation as is *8 assign state, portion to the net calculated to this income reasonably to the business within attributable done this subjecting taxpayer avoid the state to to double tax- ation.” apparently
The State Tax Commission concluded that prepare permit petitioner differently the to to return than had the custom would not been allocate to this state proportion of the Utah net Division’s fairly equitably attributable to business done within filing require state. to And accordance with subject the custom would not the Utah Division of Kenne- Accordingly, dis- cott to taxation. Commission double original regarded request treated the controlling. accounting method as good reversing Tax Com the State
We see no reason ruling many practical mission on this difficulties see instances, permitted. had a different method been some the actual net income to allocated to business be transacted in this state cannot fixed with certain be ty legislature up set and then so one method power permit clothed the with the selection accurately if it another method would more reflect By (8), provision true income. of subsection 80— legislature granted supra, U. C. A. to the 13— modify pres Tax Commission discretion some statutory cribed method and interfere before we can with imposed taxpayer ap the method on or used it must pear arbitrarily the commission acted and abused dis showing permit cretion. failWe to discover a sufficient our interference as no abuse of discretion has been estab petitioner. kept lished Kennecott’s books are on the determining deficiency basis used the commission in necessity kept and must of furnish the so desired infor mation to both the federal and state authorities. The fran reports up year chise tax filed until the on 1947 were based prescribed system aside from certain contested items they suggest equitable a fair and means of liability. the tax To use the method set out first subparagraphs might of the section introduce variable factors, imposible ascertainment, some such as the re mining lative property. value of mines or The deter might mination of this factor alone lead to endless and unsatisfactory litigation. might unjustly In addition it against discriminate this state or the might tax assessed bear relationship no reasonable value of the ore extracted or the amount of business done in this state. *9 Packing
Petitioner refers us to the case of California Corporation P. v. State Tax 97 Utah 463, 468, authority 2d as its contention that the State arbitrarily permitting Tax Commission acted in not company belatedly accounting to method. We quote opinions from both in that case to establish that we recognized right rely Commission to subparagraph (8) compliance on when strict with the regulations might other rules inequitable result in an allocation to the taxpayer subjected state or when the is to double taxation. LARSON,
Mr. Justice majority opinion, author stated as follows: “One further matter is argued. presented in the issues as framed meaning (8) This involves the construction of subsection of Section reading as follows:
80 — “ judgment ‘If in the of the tax commission the application of the fore- going rules does not locate to this state the proportion of net income fairly equitably to attributable this it state, with such may information be able to may obtain make such allocation as is fairly calculated tO' assign to this state portion income reasonably attributable subjecting the business done within state and to avoid the taxpayer (Italics added.) to double taxation.’ gives argument. “We have italicized the clause that rise to the controlling contends Company that the last clause is and the Commission can from depart formula statutory set forth in the first seven sub- sections of the section only when such departure necessary ‘to avoid sub- jecting double taxation.’ The Commission takes general grant position that the subsection is a of power from depart formula statutory whenever necessary order to allocate computation to the state for purposes the proper proportion of the net income fairly attributable to business done in this state. such upon And justifies construction redetermining the Commission its action in the tax against (e) rather than Company upon the construction of subdivision discussed and above. construed As far as statutory construction con- (8) general cerned we think authorizing subsection is a section Tax Commission from the depart formula set out in subsection whenever the application the provisions subsection does not allocate to the state the business fairly attributable state whenever such application results in double taxation. But we do not think calling present case has been shown to be one * * *” departure formula. statutory *10 concurring opinion, arrives WOLFE, in his Mr. Justice interpretation of that his the conclusion. He states same holding that “I concur subsection to be as follows: 18—21, (8) R. Utah S. subsection of Section 80— is grants authority where depart from the rules taxpayer. required or to the to be fair either the state any precludes very reading (8) other The of subsection determining ‘portion of net income construction. the assignable the commis- within this state’ business done opinion. ‘may’ This rules out in the main sion use the set ignore may mean the rules does not the Commission meaning ‘May’ of ‘should’ and choose own. has the e., rules fail to ac- i. should follow the rules unless the complish overarching purpose the as revealed subsec- (8). only application It is an of the rules tion case as proportion laid fails to ‘allocate to this the of down state fairly equitably and to this state’ net income attributable (8)], hand, the or on other where rules would [subsection subject taxpayer the to so-called double taxation the may depart from them.” problem here that concerns us is not that the com- non-statutory taxpayer mission seeks to force the to a contrary, permitted basis. On Commission has taxpayer to file on a basis it which the tax- selected payer seeks to because the amount of tax has be- request may entirely legitimate come onerous. Such be but when as here there are which be factors cannot de- any degree satisfaction, request termined with years made some six after the tax and has accrued only assigned change may substantially reason showing liability, reduce the tax is not sufficient arbitrary capric- convince us that the Commission was denying request. ious Petitioner’s contention in this respect is overruled. validity assignment
To determine the of the second necessary error it is that we refer to section 80— (9) (b), (a) pro- U. C. A. which subsections vide as follows: “(9) (a) wear The basis which upon depletion, depreciation, exhaustion, obsolescence are to be allowed in tear, respect any property shall be the same as is Section for provided in 80 —13—14 purpose gain or loss the sale or other of such upon disposition
property, except hereinafter in this section provided. “(b) The allowance shall thirty-three per and one-third during cent the net taxable year, computed without allowance on the basis in subsection depletion, provided (a), as the elect. The basis which elects under *11 taxpayer accounting this subsection shall be the in subsequent basis used and periods changed shall be with thereafter the consent of the tax only commission.” (Emphasis supplied) (9) (a) Section U. 13—14, C. A. referred to in deals above, 80 — gains with the for basis or losses from the sale or other dis- position of acquired after December That been 31, 1930. basis has referred to as cost until depletion. Up controversy arose, petitioner (9) (b) always elected to under compute subsection depletion rather (a). than If we were limit to our discussion to the these sub- provisions two paragraphs it would there are appear two methods for only deter- mining percentage one is the method the other cost depletion; and is the subparagraph (8), Petitioner, method. our calls attention to however, “(8) Section U. C. A. which provides as follows: In the 80 — gas case of oil and other natural a mines, wells, deposits, timber, reasonable for allowance for depletion depreciation improvements, according in each peculiar condition case; such allowance reasonable regulations in all made cases to be under rules and be prescribed to the by tax In the leases, commission. case of shall deduction be equitably (Emphasis supplied.) between the apportioned lessee the lessor.” depletion
Its contention is that if be limited to the two prescribed subscription (9) methods that such a con struction provision overlooks the underscored of subsec (8). phrase tion That could be construed to mean that appropriate most pre selection of the two methods by peculiar scribed statute should dicated be of each conditions case. Or well be that legislature authority upon intended to confer the Commis- ion to use another if a method situation arose which would percentage depletion make both the and cost un- questions not those reasonable. We need determine option had method it desired Kennecott select the years period continued to use to use over the it has percentage depletion seemed method. This to be an entirely satisfactory method until the Commis- requiring sion commenced Federal taxes to be deducted applying depletion percentage. The statute re- before quires taxpayer to continue to use the selected method change. unless consent of the Commission is obtained statute, change, permitting while presupposes This a a timely request long and not one made after return deficiency change A submitted and a determined. regulations might grounds good administrative be for re- questing change accounting practice, again, but request unduly delayed should not be and some substantial reason should advanced repeated so requests not faced with change systems merely purpose escaping liability. sought convince
Petitioner the Commission and seeks equitable to convince this court a more and fair basis by adopting *12 would be the formula used the Federal Government. The formula per used in Federal returns gross percent proceeds, mits 15 of the but not to exceed percent net, to be adoption deducted. The year question might that method the in be more advantageous to Kennecott but that reason alone require not does the Tax per State Commission to previously mit its use. had Petitioner selected one of the legislature by up methods set the upon and the burden is peculiar existing it to establish that conditions in its reasonably are require case such as to the Commission to permit adoption Assuming of another method. that might, justify, if adopt conditions a basis of determination provided different by from the two statute, we are petitioner not convinced that has es- part the Com- on the discretion an abuse
tablished might system reduce merely another because mission larger would liability than it is tax That load. systems granted to switch permission petitioner were be if other- finding To hold of arbitrariness. compel a does not the stat- to abandon require the Commission wise would tax was asserted utory time the methods each excessive. largely assignments are of error fourth
The third and together. In connection be discussed and will interrelated point Kennecott’s assignments out it is well to these with either Division The Utah operation. method of unusual digging ore from directly involved performs or is ore, concentrates, the blister ground; transporting the mills; having smelted milling the ore copper, the ore at selling eventually recovered. smelters; and, the metals at owned systems are not transportation and the smelters selling organization are. by but the mills Kennecott they shipped to smelters milled are After the ores are product remains title to the Kennecott- and the account of sold the minerals are Kennecott until such time as unique problem Corporation. The is Kennecott Sales brought operation that is into focus statute, depletion net income received from is limited to operations in- property, post-mining of Kennecott and the usually extraction and sale fields not associated with vade post- all these Kennecott claims that the costs of ores. gross mining charged against in- activities should purposes, depletion but come to arrive at its net income for post-mining income attributable to these that no hand, operations. The on the other (b), the narrower view that section 80—13—8 takes 1943, requires per- U. C. A. be limited to a centage of the net
part of Kennecott’s Utah Division net income is *13 milling, smelting, operations from realized and sales Mining property. and from not realized As a conse- quence of the view taken the Tax the de- ficiency computed by splitting tax was total net income between net income from the income from smelting, refining, transportation selling, or what designate we shall as fabrication and sales income. Commission, being The State Tax unable to obtain Kennecott a breakdown of estimated income allocated to mining operations sale, and to fabrication and conceived and used a formula which it believed made a fair reasonable simplest form, allocation. Reduced to its supposition formula was mining based on the relationship bore the same to fabrication and sale income mining post-mining costs bore to the operation costs. way, mining Stated another equalled if the costs fabri- cation and sale then costs the income to be credited to mining operations equal would be to the income credited post-mining operations. By using prepared formula, sixty-eight per- concluded that cent of Kennecott’s net mining income should be credited to operations thirty-two percent post mining activities. It be that the use of the formula inappropriate was be- using cause estimated, questionable factors, or unknown percentages but the final closely used so approximated the allocation used Kennecott when it submitted its original return that any prejudice doubtful resulted.
Counsel for both the petitioner Commission and the have arising referred us to cases under different statu- tory provisions regulations. or administrative they While suggest paths followed, to be statutory difference in guideposts requires a approach different in this case. Generally speaking, phrase “income pro- from the perty” means mining. the income from The latter term usually understood to merely mean not the extraction
156 ordinary ground, the but also the minerals from ores in order by operators normally applied processes treatment product. commercially mineral marketable the to obtain smelter to the operator direct the sells cases where In those returns, little diffi- the net smelter payment made on is beyond go Here, however, we far culty is encountered. digging the time the owner from Kennecott that as post-mining selling. Undoubtedly day each of product this is appreciates the value of processes increasing If Kennecott. the net income to in reflected then we to this state were allocated the total net income question whether might the difficult be faced with post-mining permitting the not on the one hand we were the state and the franchise tax due operations to increase right denying taxpayer on the other hand However, depletion calculations. increased income for net received from allocates the when income, ques- appreciation to net another out of state presents tion itself. difficulties be encoun-
Because of the arithmetical tax, parties computing have assumed tered in the final making responsibility final based determination Partly principles for reason and on the we enunciate. partly because certain difference must be reconciled illustrating analyzing con- this last contention and our only figures. cept, approximate we used original return, it showed Kennecott filed When $8,617,511.00 Division. a total net income of for the Utah it all of this net income was not earned Because contended Utah, used an allocation factor of 66.926 percent done in this of the income attributable to business (It point noted at this this is the state. should be determining same factor used the Commission in deficiency tax.) By applying this factor to the total net Division, income of Utah Kennecott determined that $5,803,351 of its total income should allocated figures income, quoted Utah. Both of are net after de- pletion, $13,568,213 shown in Kennecott’s books as the amount for this item. deduc- deducted tion used was because did excessive Kennecott not take paid out federal taxes before the net income depletion purposes. Accordingly, put if we back the depletion, get income, taken out amount we a total net *15 depletion, $22,185,807, before and an allocated net in- $19,371,565. By to Utah applying per- come the 33 1/3 depletion get cent to factor these two amounts we a de- pletion approximately deduction $7,395,269 in the first instance, $6,457,188 in the last instance. The State slightly higher Tax Commission used total net income deficiency percent split tax and it 68 mining percent to post-mining income and to income. By doing, it $6,455,813. so allowed a deduction of any attempt
castWe aside to reconcile differences holding in total net income we believe our will make possible parties for the to determine the exact amount. taxpayer We believe that if the all claims that net income state, portion is not earned in this allocated to must, necessity, business done state outside this not be meaning property income from the within the of our statute. to post- We are unable determine whether mining produce activities net income of the 32% Division, they Utah but Kennecott claims do and point Commission has conceded that in this case. The taxpayer petition alleges in its for redetermination that its operations it, nevertheless, per- are indivisible but makes a centage allocation between activities carried on in this post-mining state and the performed activities elsewhere. Therefore, any if net income is attributable to business elsewhere, operations done it must come from which would ordinary processes not considered normally be treatment applied operators. taxpayer The in this instance inis position assert inconsistent a rather can state performed outside this pertaining business By split- property. from the net income considered as be places, the ting and other this state income between its assign portions of it can taxpayer established has activities. mining post-mining operations and to income to approval used on the formula place our need not We arbitrarily break- determine or the Commission mining post-mining operations through point between point out that need in this case is All we do activities. taxpayer take. The paths possible for the there are. two might agree it cannot it take either but the net income is traverse both. Either state, the net income allocated to this and should be post-mining property and the activities from both the they the net income cannot are not so related that lengths roughly to which allocated to both sources. might go theory aptly illustrated under its figures approxi- first return. From an used in its *16 income, $18,000,- depletion, in this mate net before state of 000, depletion allowance of Kenneeott seeks to establish a percent pro- $13,000,000. far in excess of the 33 This is 1/3 vided for statute. disposing contention, of last hold that if Ken- we return on an allotted it must al-
necott files its basis post-mining operations of its net income locate some computing depletion. before
The case is with instructions to determine and remanded deficiency judgment enter a in accordance with the views expressed. herein McDONOUGH, JJ.,
WADE, WOLFE, and concur. PRATT, (concurring part). in Chief Justice previous In view of decisions of this court and the Fed- prevailing opinion, upon eral decision cited in the the sub- base, including I concur ject part the tax subsidies alleged er- opinion’s disposal prevailing with the Mining Company- I New Park ror. also believe that (cited) disposes tax issue. case of the federal state, and Upon income to the the issues of allocation of following: depletion, I submit legislature has a formula of this state established where cor- of net income to this state
for allocation poration 80— outside of this state. Section does business Paragraph pro- A. 1943. 8 of that section U. C. 13— ap- if, judgment vides that plication not” allocate to this state of this formula “does fairly equitably proportion attribu- of net income state, may make allo- table to this the Commission such assign fairly to this state cation as will be calculated reasonably part of net attributable to business done this state. have decided that the Commission We legislative formula, follow the unless it “should” fails to purpose (See quotations accomplish the of the formula. Packing Company v. State Commis- California sion, prevailing opinion.) cited in the upon act, such a foundation which to
With neither reject Commission nor this court should the formula be- possibly upon cause of the laborious task attendant application. Paragraph 8 of Section U. C. 80— say A. not does select its procedure, own method of if size reason of the company or ramifications of its the task of business applying “may” “might the formula be” insurmount- application able. To attack the upon pos- of the formula complications application is, effect, sibilities in that to attack the deficiencies, formula for its inherent and the *17 remedy legislature, for that lies with the not with the Com- mission, Paragraph nor with says the court. the Com- may legislative mission act on its own formula if the form- possible under properly, not because not" ula “does allocate proper alloca- contingencies “might not” make a future upon a review important becomes tion. This distinction for this reason: such as this only pos- action the Commission’s
If we measure many useless, as sibilities, almost review becomes then the imagined. may On very logical possibilities future results, by actual hand, measured if their action is other something specific may have then, upon the court review foundation a reasonable at to see if there is to look application the form- to conclude incidently, proper allocation —and a ula “does not” make of tax fact, in the amount mere increase if it be may collect, foundation not be sufficient would the state legislative reject formula. the Commission to reviewing the 13—47, court this Under Section 80— may both law consider decision of case, on uphold the Commission present fact. In the 80—13 theory by paragraph 8 propounded of Section facts —21, find in the record able to court shall be inefficacy applying the formula probative are measuring only the Commis- corporation. It light deter- that we in the of those facts action sion’s an abuse of discretion. not their action was mine whether or finger having difficulty my putting on those facts I am weight given principles to abstract view of the arguments. having company the method made a selection of
As estimating A. under Section U. C. 80— only say: agreed parties I have what the have this to previous to in controversies should not bind settlement rejection by party one if it did not the other. The the Com- previous mission of its stand in matter should throw making open company door selection as con- templated the section of the code involved.