The Charles Schwab Corporation and Subsidiaries - Page 5

                                        - 5 -                                         
          tax purposes were based on a corporation’s California income for            
          its 1969 year.  There were exceptions to that approach in                   
          situations involving a corporation’s first year of operation and            
          where the reporting year was less than a full year.  In certain             
          of those instances, the California franchise tax was based on the           
          California income for the reporting year (due or accruable as of            
          the close of the reporting year).                                           
               Our holding that section 461(d) applies results in a                   
          limitation on petitioner’s deduction for California franchise tax           
          to the amount accruable under California law as in effect before            
          1972.  Significantly, during the years under consideration,                 
          petitioner was obligated for California franchise taxes under the           
          regimen of the 1972 law.  Under the 1972 law, petitioner was                
          obligated for California franchise taxes in amounts equal to or             
          larger than those computed under the pre-1972 law.  In addition,            
          petitioner paid a franchise tax liability for each taxable period           
          beginning with the 1987 year, when it commenced business in                 
               The following table reflects the amounts of petitioner’s               
          California franchise tax obligations (including respondent’s                
          concession for the 1989 year) computed under the pre-1972 law and           

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011