Morrison & Foerster's State and Local Tax Group Wins Influential Sales Factor Case at the California Court of Appeal

Morrison & Foerster LLP

On April 15, 2009, the California Court of Appeal, First Appellate District, decided General Mills v. Franchise Tax Board. The court agreed with General Mills in holding that the “[t]he full sales price of General Mills? hedging futures sales contracts are "gross receipts? to be included in the calculation of the UDITPA sales factor.” The Court of Appeal, therefore, reversed the trial court?s conclusion to the contrary, and remanded the case to the trial court for a ruling on “whether the Franchise Tax Board met its burden of proving that the apportionment formula does not "fairly represent? General Mills? business activity within California, thus warranting imposition of an alternative formula pursuant to section 25137.”

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