Beckwith & Associates, Inc. v. Kosydar, 76-787
| Decision Date | 23 March 1977 |
| Docket Number | No. 76-787,76-787 |
| Court | Ohio Supreme Court |
| Parties | , 3 O.O.3d 411 BECKWITH & ASSOCIATES, INC., Appellee, v. KOSYDAR, Tax Commr., Appellant. |
On May 3, 1971, Beckwith & Associates, Inc., taxpayer-appellee herein, was incorporated under the laws of the state of Ohio. Appellee adopted a fiscal period ending April 30 annually.
Appellee properly filed its 1972 Ohio Corporate Franchise Tax Report on or about July 17, 1972, apparently in accordance with the Tax Commissioner's Rule TX-43-05. Under that rule, the appropriate accounting period for a new corporation paying its first franchise tax on the net income method for tax year 1972 extends from the incorporation date to December 31, 1971. Having filed its franchise tax return for 1972, appellee by letter dated November 8, 1972, filed a refund claim contending that Rule TX-43-05, as applied to it, was unfair and inequitable.
Appellee's refund claim ultimately was denied in a July 1, 1974, certificate of determination issued by the Tax Commissioner. Upon taxpayer's appeal to the Board of Tax Appeals, that determination was upheld. Subsequently, the taxpayer appealed to the Court of Appeals for Cuyahoga County and, on May 13, 1976, the decision of the board was reversed, and taxpayer's request for refund granted.
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Calfee, Halter & Griswold, John L. Naylor, Jr., Ronald H. Neill and Virginia D. Benjamin, Cleveland, for appellee.
William J. Brown, Atty. Gen., and Ronald B. Noga, Columbus, for appellant.
Tax Commissioner's Rule TX-43-05 provides that the appropriate accounting period under R.C. 5733.05 for corporations in the circumstances of appellee, a business newly-incorporated in 1971, extends from the corporation's incorporation date to December 31, 1971.
Pursuant to R.C. 5733.05, a corporation's annual report determines the value of the issued and outstanding shares of stock of the taxpayer, which is the base or measure of the franchise tax liability. Such determination is made as of the date shown by the report to have been the beginning of the corporation's annual accounting period that includes the first day of January of the tax year.
The value of the issued and outstanding shares of stock of any such corporation is ascertained in accordance with R.C. 5733.05(B). Pursuant to that statute, such value is the sum of the corporation's net income during the year, or portion thereof preceding the date of commencement of its annual accounting period that includes the first day of January of the tax year, allocated or apportioned to this state by means delineated by statute.
R.C. 5733.05(B) is express in its reference to the year 'or portion thereof' preceding the date of commencement of the annual corporate accounting span. In this state, it is presumed that, in enacting a law, the General Assembly intended for the statute to be effective in its entirety. R.C. 1.47(B).
R.C. 5733.05(B) became effective on December 20, 1971. The Tax Commissioner promulgated Rule TX-43-05 effective January 1, 1972, relative to the date on which the value of issued and outstanding shares of corporate stock was to be determined for franchise tax purposes. Paragraph (C) of the rule provides that, pursuant to ...
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