Allphin v. Glenmore Distilleries Co.
| Decision Date | 19 July 1954 |
| Citation | 270 S.W.2d 168 |
| Parties | ALLPHIN, Com'r of Revenue, et al. v. GLENMORE DISTILLERIES CO. |
| Court | United States State Supreme Court — District of Kentucky |
Squire N. Williams, Jr., William E. Scent, Frankfort, for appellants.
J. H. Gold, Louisville, for appellee.
Elmer G. Davis, Jr., Frankfort, amicus curiae.
CULLEN, Commissioner.
The Department of Revenue of Kentucky appeals from a judgment that voided an additional income tax assessment levied by the department against Glenmore Distilleries Company for the year 1950. The question involves the proper allocation of business income of the company to Kentucky.
The controlling statute is KRS 141.120, which deals generally with the allocation of the income of corporations doing business both within and without Kentucky. Subsection (3) of that statute provides a formula for allocating 'business' income, based on the factors of payrolls, tangible property, and business receipts. Paragraph (f) of that subsection provides as follows:
'(f) Receipts from sales and other sources shall be assigned only to the office, agency or place of business of the corporation at which the transactions giving rise to the receipts are chiefly negotiated.'
The controversy centers around the interpretation of paragraph (f). In essence Glenmore contends that the receipts from orders for whiskey procured from buyers in other states, through its sales offices, agencies or places of business located outside of Kentucky, should not be assigned to Kentucky, while the department maintains that other elements of the complete sales transaction, in addition to the one element of order procurement, must be considered, and that the receipts must be assigned to Kentucky if the predominant elements of the sales transaction take place in this state. The view of the department is expressed in a regulation promulgated by it in 1953, which provides:
* * *'
Glenmore has its main executive offices and accounting offices in Louisville, Kentucky. Its production plant and principal warehouses are located in Daviess County, Kentucky. Its main income is from the sale of whiskey. It has district or regional sales offices in 29 states, and has salesmen in 16 additional states who are responsible to one of the district or regional offices. Orders procured by salesmen in those 45 states are sent to the Louisville office, upon forms which recite that the order is 'subject to approval of Seller's Office in Louisville, Kentucky.' The orders are processed in the Louisville office, and then transmitted to the plant in Daviess County for shipment. Packaging and shipment are made from the warehouses in Daviess County. Accounts receivable are maintained at the Louisville office, and payments on account are received at that office.
The additional assessment made by the ...
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...or effecting' sales. 4 Appellant refers to a definition of negotiation used by the Kentucky Supreme Court in Allphin v. Glenmore Distilleries Co., 270 S.W.2d 168, 169 (Ky.1954): 'We concur in the view expressed in the cases above cited that the word 'negotiated,' as used in the allocation s......
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