CASES OF SIGNIFICANCE
 
Ü Ex parte Alabama Department of Revenue (Kimberly-Clark Corp. & Kimberly-Clark Worldwide, Inc. v. Alabama Department of Revenue), Supreme Court of Alabama, #1070925

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 (I was co-counsel for the Department in the trial court) – in July 2007, trial court ruled in favor of Department, and companies appealed - in March 2008, appellate court reversed, and the Alabama Supreme Court granted the Department's request for review on May 8, 2009 - on February 26, 2010, the Supreme Court reversed, and held in favor of the Department - I continue to represent the Department in these cases
  
Ü Ex parte VFJ Ventures, Inc. (Surtees & Alabama Department of Revenue v. VFJ Ventures, Inc.), Supreme Court of Alabama, #1070718
 
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 20 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 – in January 2007, trial court ruled in favor of VFJ - Department appealed to Court of Civil Appeals - on February 8, 2008, the Court of Civil Appeals reversed the trial court, holding in favor of the Department - Alabama Supreme Court affirmed the Court of Civil Appeals on September 19, 2008 - the United States Supreme Court denied review on April 27, 2009 (#08-916) - I represented the Department in this case

Ü James E. Prince, Jr. v. Alabama Department of Revenue, Montgomery County Circuit Court, CV06-2766
 
individual income tax case concerning whether Alabama can tax gain from sale of stock by non-resident - the trial court granted summary judgment to the Department - Mr. Prince appealed to the Court of Civil Appeals (#2080634) - on January 22, 2010, the appellate court affirmed the trial court - Mr. Prince's application for rehearing is pending - I represent Mr. Prince

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 (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; the rehearing request was granted, and the case was remanded to circuit court - the case was resolved by mediation
  
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
  
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) – ALJ ruled in Knauf's favor
  
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
  
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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