Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768, 13 (1992)

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Opinion of the Court

As these cases make clear, the unitary business rule is a recognition of two imperatives: the States' wide authority to devise formulae for an accurate assessment of a corporation's intrastate value or income; and the necessary limit on the States' authority to tax value or income that cannot in fairness be attributed to the taxpayer's activities within the State. It is this second component, the necessity for a limiting principle, that underlies this case.

As we indicated in Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U. S., at 442: "Where the business activities of the dividend payor have nothing to do with the activities of the recipient in the taxing State, due process considerations might well preclude apportionability, because there would be no underlying unitary business." The constitutional question becomes whether the income "derive[s] from 'unrelated business activity' which constitutes a 'discrete business enterprise.' " Exxon Corp. v. Department of Revenue of Wis., 447 U. S., at 224 (quoting Mobil Oil, supra, at 442, 439).

Although Mobil Oil and Exxon made clear that the unitary business principle limits the States' taxing power, it was not until our decisions in ASARCO Inc. v. Idaho Tax Comm'n, 458 U. S. 307 (1982), and F. W. Woolworth Co. v. Taxation and Revenue Dept. of N. M., 458 U. S. 354 (1982), that we struck down a state attempt to include in the apportionable tax base income not derived from the unitary business. In those cases the States sought to tax unrelated business activity.

The principal question in ASARCO concerned Idaho's attempt to include in the apportionable tax base of ASARCO certain dividends received from, among other companies, the Southern Peru Copper Corp. 458 U. S., at 309, 320. The analysis is of direct relevance for us because we have held that for constitutional purposes capital gains should be treated as no different from dividends. Id., at 330. The ASARCO in the 1982 case was the same company as the

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