CASES OF SIGNIFICANCE

 Ü State of Alabama Department of Revenue v. Kimberly-Clark Corp. & Kimberly-Clark Worldwide, Inc., Montgomery County Circuit Court, CV03-994 & CV03-2157  (consolidated)

corporate income tax cases concerning whether gain from divestiture of mill & timberland division constituted “business” or “non-business” income – cases involve final assessments totaling $20.8 million – trial was held in February 2004, and parties are awaiting ruling (I was co-counsel for the Department in these cases.)
  
 Ü VFJ Ventures, Inc. v. Surtees & State of Alabama Department of Revenue, Montgomery County Circuit Court, CV03-3172
 
corporate income tax case concerning Alabama’s “add-back” statute, which authorizes Department to “add back” royalty and interest payments to corporation’s income, if those payments were made by that corporation to related corporations – approximately 12 states have such a statute, and VFJ is the first case in the country involving “add-back” statute to be litigated – VFJ involves final assessment of $1.02 million – I also represented the Department in 25 administrative cases involving the “add-back” statute that are being held in abeyance, pending the outcome of VFJ – the 25 administrative cases involve a total of approximately $7.8 million – VFJ was tried in July 2006
  
Ü AmSouth Bancorporation, et al. v. Surtees & State of Alabama Department of Revenue, Montgomery County Circuit Court, CV 05-3202 through CV 05-3214
 
financial institution excise tax and corporate income tax cases concerning proper tax jurisdiction of investment management company; deductibility of depreciation relating to sale in/lease out transactions; deductibility of grantor-trust losses; characterization of REIT – 13 cases involve final assessments totaling approximately $63.5 million – cases are in early stages of discovery (I was co-counsel for the Department.)
  
Ü AT&T Corp. v. Surtees & State of Alabama Department of Revenue, Jefferson County Circuit Court, CV04-3356
 
business privilege tax and corporate shares tax case concerning whether deduction for investment in other entities that are doing business in Alabama is unconstitutional – case involves refund petition for $818,000 – trial was held in March 2005 – in June 2005, court ruled in favor of the Department (I was co-counsel for the Department in this case.) -- AT&T appealed to the Court of Civil Appeals, which ruled in AT&T’s favor – the Department applied for rehearing with the Court of Civil Appeals
  
Ü Ortho Pharmaceutical Corp. v. Department, Administrative Docket # Corp. 06-273
Ü Janssen Pharmaceuticals v. Department, Administrative Docket # Corp. 06-274
Ü Ortho Biotech, Inc. v. Department, Administrative Docket # Corp. 06-275
 
corporate income tax cases concerning whether these subsidiaries of Johnson & Johnson had nexus with Alabama by virtue of clinical trials performed in this state relating to pharmaceutical products of the companies – these administrative cases involve a combined amount of approximately $3.1 million – a hearing has yet to be held
  
Ü AT&T Corp. v. State of Alabama Department of Revenue, Administrative Docket # Corp. 05-403
 
corporate income tax case concerning whether a subsidiary of AT&T should be included in AT&T’s Alabama “consolidated-filing group” and whether AT&T’s deduction for NOL should have been limited by Alabama’s “separate return limitation year” rules – case involves final assessment of $1.6 million – ALJ ruled in Department’s favor as to first issue and in AT&T’s favor as to SRLY issue, reducing assessment to $1 million
  
Ü Knauf Fiber Glass GMBH, Inc. v. Department, Administrative Docket # Corp. 05-970
 
corporate income tax case concerning a deduction for interest expense associated with industrial-development bonds and concerning the sales factor of Knauf – a hearing was held, and the parties submitted briefs (I was co-counsel for the Department in this case.)
  
Ü State of Alabama Department of Revenue v. Weyerhaeuser USA Subsidiaries, Wilcox County Circuit Court, CV05-43
 
corporate income tax case concerning Alabama’s “consolidated-filing” statute, which allows certain related corporations to file corporate income tax returns on a consolidated (or group) basis – this was a case of first impression in Alabama, involving whether the consolidated group as a whole could claim “net operating losses” (NOLs) incurred by two members of group prior to election to file Alabama consolidated return, or whether NOLs were limited to offsetting income of the two members that incurred the losses – case involved final assessment for $361,000 – Department’s ALJ ruled in favor of the Weyerhaeuser group -- case was settled in circuit court -- I also represented the Department in an administrative case that was being held in abeyance, pending the outcome of Weyerhaeuser (Vulcan Engineering Co. v. Department, Administrative Docket #Corp. 05-161) – Vulcan involves the SRLY issue and an apportionment issue – the case may be heard in the near future, now that Weyerhaeuser is settled
  
Ü Ex parte Sonat, Inc., Supreme Court of Alabama, #1961585
 
corporate income tax case concerning whether Sonat was entitled to a deduction for a $185 million dividend that it received from Sonat Offshore Drilling, Inc. – case involved final assessment for $12.1 million – Jefferson County Circuit Court voided final assessment; Court of Civil Appeals reversed and upheld Department’s assessment against Sonat; Supreme Court reversed (I was assisting counsel in this case.)
  
Ü Ex parte Uniroyal Tire Company, Inc., Supreme Court of Alabama, #1981928
 
corporate income tax case concerning whether gain from sale of partnership interest constituted “business” or “non-business” income – case involved final assessment for $2.7 million – Department’s ALJ ruled that Alabama’s definition of “business” income contained two tests, but that Uniroyal’s gain did not satisfy either test, so the gain was “non-business” income; Montgomery County Circuit Court reversed, and ruled that gain was “business” income, apportionable to Alabama; Court of Civil Appeals affirmed; Alabama Supreme Court reversed, holding that Alabama’s definition of “business” income had only one test, and that Uniroyal’s gain was “non-business” income, allocable outside of Alabama   
  
Ü The Colonial Bancgroup, Inc. v. State of Alabama Department of Revenue, Montgomery County Circuit Court, CV01-311
 
financial institution excise tax case concerning whether an income-tax NOL incurred by “C” corporations prior to their merger into a financial institution could be used to offset the bank group’s consolidated financial institution excise tax liability – case of first impression in Alabama – final assessment for $1.75 million – Department’s ALJ ruled in favor of Department, and Colonial Bancgroup appealed to circuit court – Department was successful in getting appeal dismissed by circuit court for lack of subject-matter jurisdiction

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