Paul L. Caron

Wednesday, September 26, 2007

Supreme Court Grants Cert in Two Tax Cases

Boulware v. United States (No. 06-1509):

Whether a taxpayer who seeks to invoke the return of capital rule in a criminal tax case must show a contemporaneous intent to treat the corporate distribution as a return of capital?

Meadwestvaco v. Illinois Dept. of Revenue (No. 06-1413):

Is the attempt by Illinois to tax the approximately $1 billion gain realized by Petitioner when it sold its investment in Lexis/Nexis in 1994 (which it acquired in 1968 for $6 million and which functioned for 26 years as an independent, nonunitary business) in direct conflict with the decisions of the Court in Allied-Signal, Inc. v. Director, Division of Taxation, 504 U.S. 768 (1992), F.W. Woolworth Co. v. Taxation & Revenue Department of New Mexico, 458 U.S. 354 (1982) and ASARCO Inc. v. Idaho State Tax Commission, 458 U.S. 307 (1982) and the Due Process and Commerce Clauses of the United States Constitution?

UpdateMichael McIntyre (Wayne State):

Given how few tax cases the Supreme Court seems willing to take, I find it disappointing when the cases seem as narrow as the two here. On the criminal case, I don't know enough to have an opinion, although, after reading the petition, I do have one . The other case is an Allied Signal case, dealing with whether the sale of Lexis/Nexis was part of the sale of business property or investment property. Odd case for cert., given the highly factual nature of that issue. I just hope the court is not taking it to expand the tax-free zone for businesses.

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