Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768, 3 (1992)

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2. The stipulated factual record in this case makes clear that, under this Court's precedents, New Jersey was not permitted to include the gain realized on the sale of Bendix's ASARCO stock in its apportionable tax base. There is no serious contention that any of the three Woolworth factors were present. Functional integration and economies of scale could not exist because, as the parties stipulated, the companies were unrelated business enterprises. Moreover, there was no centralization of management, since Bendix did not own enough ASARCO stock to have the potential to operate ASARCO as an integrated division of a single unitary business and since even potential control is insufficient. Woolworth, supra, at 362. Contrary to the State Supreme Court's view, the fact that an intangible asset was acquired pursuant to a long-term corporate strategy of acquisitions and investment does not turn an otherwise passive investment into an integral operational one. See Container Corp., 463 U. S., at 180, n. 19. The fact that a transaction was undertaken for a business purpose does not change its character. Little is revealed about whether ASARCO was run as part of Bendix's unitary business by the fact that Bendix may have intended to use the proceeds of its gain to acquire another company. Nor can it be maintained that Bendix's shares amounted to a short-term investment of working capital analogous to a bank account or a certificate of deposit. See ibid. Pp. 788-790.

125 N. J. 20, 592 A. 2d 536, reversed and remanded.

Kennedy, J., delivered the opinion of the Court, in which White, Stevens, Scalia, and Souter, JJ., joined. O'Connor, J., filed a dissenting opinion, in which Rehnquist, C. J., and Blackmun and Thomas, JJ., joined, post, p. 790.

Walter Hellerstein reargued the cause for petitioner. With him on the briefs were Prentiss Willson, Jr., Harry R. Jacobs, Robyn H. Pekala, Andrew L. Frey, Kenneth S. Geller, Charles Rothfeld, and Bennett Boskey. Andrew L. Frey argued the cause for petitioner on the original argument. With him on the briefs were Messrs. Willson, Hellerstein, and Jacobs, Evan M. Tager, and Mr. Boskey.

Mary R. Hamill, Deputy Attorney General of New Jersey, reargued the cause for respondent. With her on the briefs

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