RIVER GARDEN RETIREMENT HOME v.FRANCHISE TAX BOARD Part-I
<script src="http://www.google-analytics.com/urchin.js" type="text/javascript"> </script> <script type="text/javascript"> _uacct = "UA-1698443-1"; urchinTracker(); </script> <html ><br /> <head><br /> <title>RIVER GARDEN RETIREMENT HOME v</title><br /> </head><br /> <body><br /> <div><br /> <br/> <br /> <br/><b > </b><br /> <br/><b > </b><br /> <br/><b<br /> >RIVER GARDEN<br /> RETIREMENT HOME v.</b><br /> <br/><b >FRANCHISE TAX BOARD</b><br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/>Filed 7/15/10<br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/> <br /> <br/><b<br /> >CERTIFIED FOR PUBLICATION</b><br /> <br/> <br /> <br/>IN<br /> THE COURT OF APPEAL OF THE STATE OF CALIFORNIA<br /> <br/> <br /> <br/>FIRST<br /> APPELLATE DISTRICT<br /> <br/> <br /> <br/>DIVISION<br /> FOUR<br /> <br/> <br /> <br/> <br /> <table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0<br /> ><br /> <tr ><br /> <td width=319 valign=top ><br /> <br/>RIVER<br /> GARDEN RETIREMENT HOME,<br /> <br/> Plaintiff and Appellant,<br /> <br/>v.<br /> <br/>FRANCHISE<br /> TAX BOARD,<br /> <br/> Defendant and Respondent.<br /> </td><br /> <td width=319 valign=top ><br /> <br/> <br /> <br/> <br /> <br/> A123316<br /> <br/> <br /> <br/> (San<br /> Francisco City<br /> and County<br /> <br/> Super. Ct.<br /> No. CGC07-467783)<br /> <br/> <br /> </td><br /> </tr><br /> </table><br /> <br/> <br /> <br/> For<br /> years Revenue and Taxation Code[1]<br /> section 24402 allowed California<br /> corporate taxpayers to deduct a portion of the dividends they received from<br /> another corporation when those dividends were included in the payer's measure<br /> of California franchise, income<br /> or alternative minimum tax. The court in<br /> <i >Farmer Bros. Co. v. Franchise Tax Board</i><br /> (2003) 108 Cal.App.4th 976, 980, 986-987 (<i >Farmer<br /> Bros</i>.) held that section 24402 violates the commerce clause of the United<br /> States Constitution by allowing the dividends received deduction where the<br /> dividend-paying corporation was subject to California tax, but disallowing it<br /> where such corporation was not subject to California tax.<br /> <br/> Appellant<br /> River Garden Retirement Home (River Garden or the company) claimed the<br /> dividends received deduction for tax years 1999 and 2000, but, in the wake of <i<br /> >Farmer Bros</i>., respondent Franchise Tax<br /> Board (FTB) disallowed the deductions for tax years ending on or after December<br /> 1, 1999, and issued notices of proposed assessment for additional tax for the<br /> two years at issue in this case. As<br /> well, the FTB imposed an amnesty penalty under California's<br /> tax amnesty program[2]<br /> because River Garden<br /> did not pay the tax deficiencies announced in those notices until two years<br /> after the close of the amnesty period. <br /> Section 19777.5, subdivision (a)(2) subjects eligible taxpayers, such as<br /> River Garden, who did not participate in the amnesty program to a penalty on<br /> amnesty-eligible deficiency assessments that remain â€