Smithfield Scores Preferred California Income Tax Treatment (1)

Smithfield Packaged Meats Corp. convinced a California trial court that it qualifies as an agricultural business permitted to use a special formula to calculate what portion of its income is taxable in the state.

Smithfield’s franchise tax liability for 2014 will decrease about $940,000, by the company’s calculations, after the California Superior Court for Los Angeles County ruled late Thursday that the company may use the three-factor apportionment formula—which considers the location of a taxpayer’s payroll, property, and sales—rather than the standard formula that considers only sales.

Judge Gary D. Roberts also struck down a California Franchise Tax Board regulation ...