Smithfield Ruling Gives Companies Leg Up on Preferred Tax Method

Smithfield Packaged Meats Corp.'s win in a recently finalized California court ruling that shrinks its franchise tax liability is giving tax practitioners hope they can push for more exceptions to state rules for apportioning corporate income.

While the decision is only at the trial court level, it could influence how much flexibility is afforded to businesses when calculating what portion of their income is taxable in a state, some practitioners say. Others in the tax field, however, noted the ruling’s impact may still be limited to Smithfield’s situation.

The case, which concerns an apportionment formula adopted by the majority of ...