Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768, 15 (1992)

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Opinion of the Court

none of these factors was present. The subsidiaries were found not to be part of a unitary business. Ibid.

Our most recent case applying the unitary business principle was Container Corp. of America v. Franchise Tax Bd., 463 U. S. 159 (1983). The taxpayer there was a vertically integrated corporation which manufactured custom-ordered paperboard packaging. Id., at 171. California sought to tax income it received from its wholly owned and mostly owned foreign subsidiaries, each of which was in the same business as the parent. Id., at 171-172. The foreign subsidiaries were given a fair degree of autonomy: They purchased only 1% of their materials from the parent, and personnel transfers from the parent to the subsidiaries were rare. Id., at 172. We recognized, however:

"[I]n certain respects, the relationship between appellant and its subsidiaries was decidedly close. For example, approximately half of the subsidiaries' long-term debt was either held directly, or guaranteed, by appellant. Appellant also provided advice and consultation regarding manufacturing techniques, engineering, design, architecture, insurance, and cost accounting to a number of its subsidiaries, either by entering into technical service agreements with them or by informal arrangement. Finally, appellant occasionally assisted its subsidiaries in their procurement of equipment, either by selling them used equipment of its own or by employing its own purchasing department to act as an agent for the subsidiaries." Id., at 173.

Based on these facts, we found that the taxpayer had not met its burden of showing by " ' "clear and cogent evidence" ' " that the State sought to tax extraterritorial values. Id., at 175, 164 (quoting Exxon Corp., supra, at 221, in turn quoting Butler Brothers v. McColgan, 315 U. S. 501, 507 (1942), in turn quoting Norfolk & Western R. Co. v. North Carolina ex rel. Maxwell, 297 U. S. 682, 688 (1936)).

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