Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U.S. 768, 19 (1992)

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786

ALLIED-SIGNAL, INC. v. DIRECTOR, DIV. OF TAXATION

Opinion of the Court

tions respecting the retroactive effect of our decision would also be presented. See James B. Beam Distilling Co. v. Georgia, 501 U. S. 529 (1991). New Jersey's proposal would disrupt settled expectations in an area of the law in which the demands of the national economy require stability.

Not willing to go quite so far as New Jersey, some amici curiae urge us to modify, rather than abandon, the unitary business principle. See, e. g., Brief for Multistate Tax Commission as Amicus Curiae; Brief for Multistate Tax Commission as Amicus Curiae on Reargument; Brief for Chevron Corporation as Amicus Curiae. They urge us to hold that the Constitution does not require a unitary business relation between the payor and the payee in order for a State to apportion the income the payee corporation receives from an investment in the payor. Rather, they urge us to adopt as the constitutional test the standard set forth in the business income definition in 1(a) of the Uniform Division of Income for Tax Purposes Act (UDITPA), 7A U. L. A. 331, 336 (1985). Under UDITPA, "business income," which is apportioned, is defined as: "income arising from transactions and activity in the regular course of the taxpayer's trade or business and includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer's regular trade or business operations." UDITPA 1(a). "Non-business income," which is allocated, is defined as "all income other than business income." 1(e).

In the abstract, these definitions may be quite compatible with the unitary business principle. See Container Corp., supra, at 167 (noting that most of the relevant provisions of the California statute under which we sustained the challenged tax there were derived from UDITPA). Furthermore, the unitary business principle is not so inflexible that as new methods of finance and new forms of business evolve it cannot be modified or supplemented where appropriate. It does not follow, though, that apportionment of all income

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