Kentucky Tax Commission v. American Refrigerator Transit Co.
| Citation | 294 S.W.2d 554 |
| Parties | KENTUCKY TAX COMMISSION, etc., et al., Appellants, v. AMERICAN REFRIGERATOR TRANSIT COMPANY, Appellee. |
| Decision Date | 12 October 1956 |
| Court | United States State Supreme Court (Kentucky) |
William S. Riley, Frankfort, for appellants.
James W. Stites, Louisville, for appellee.
The principal question in this case is whether Kentucky may levy an income tax on a foreign corporation, admittedly doing no business within the state, but whose refrigerator cars traverse the state in interstate commerce on the lines of connecting carriers of several western railroads which have leased the cars. The foreign corporation receives a specified rate per mile for the use of its cars, and the state has attempted to levy an income tax on the net profits derived by the foreign corporation from the mileage its cars traveled in Kentucky.
The appellee, American Refrigerator Transit Company, is a New Jersey corporation, with its home office in St. Louis, Missouri. It is engaged in the business of furnishing its refrigerator cars under lease on a mileage rental basis to various railroads, none of which operate in Kentucky, but the cars do pass through Kentucky in interstate commerce. None of the car leases are executed in Kentucky, the lessor corporation exercises no control over the routing of the cars, and the mileage payments of the various railroads transporting the cars--including the connecting carriers operating in Kentucky--are not made in this state. The appellee, lessor, receives the same rate per mile from all railroads hauling the cars regardless of the existence of a lease or contract with the particular railroad.
During 1953 the appellee's refrigerator cars traveled 1,592,182 miles in Kentucky which resulted in a net Kentucky income to the appellee of $5,563 derived from its cars traversing this state, with an asserted resultant tax and penalty of $312.90 which the Kentucky Department of Revenue is attempting to assess and collect, and which the trial court ruled is an invalid tax and hence uncollectible.
It is the contention of the Department of Revenue that KRS 141.040, a part of our income tax law, was amended in 1948 in order to enable the state to tax income of foreign corporations 'derived from business done, property located, activities or sources in this state' regardless of whether the corporation actually was doing business here or had property the situs of which was here. The Department contends that the appellee derived income from the mileage its cars were hauled in Kentucky, and hence part of its income was derived from 'activities or sources' in Kentucky within the meaning of the statute. The theory or basis upon which...
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...in Georgia by lessee is not income from "doing business in th[e] state" under Georgia statute); Kentucky Tax Comm'n v. American Refrigerator Transit Co. (1956), Ky., 294 S.W.2d 554 (under Kentucky's statute, the in-state presence of moveable property is not the source of the rental income, ......
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