07-16-09 MCKESSON WATER PRODUCTS CO. V. DIRECTOR, DIVISION OF
TAXATION
A-5423-06T3
In this appeal, we are required to decide whether the Tax
Court correctly construed the term "nonoperational income," as
used in N.J.S.A. 54:10A-6.1(a), to determine whether plaintiff's
gain from a deemed asset sale under Internal Revenue Code
§338(h)(10) is subject to the New Jersey Corporation Business
Tax (CBT). As a corollary to this issue, the Director of
Taxation also sought a remand for the Tax Court to consider the
applicability of the "unitary business" principle, in light of
the United States Supreme Court's decision in Meadwestvaco Corp.
v. Illinois Department of Revenue, 553 U.S., ___, 128 S. Ct.
1498, 170 L. Ed. 2d 404 (2008).
We affirm substantially for the reasons expressed by the
Tax Court in McKesson Water Products Co., v. Director, Division
of Taxation, 23 N.J. Tax 449 (Tax 2007). We also deny the
Director's application for remand. Because the central issue in
this appeal is resolved based on purely statutory grounds, we
discern no legal basis to reach the constitutional issues
implicated in the unitary business principle.
Richard Sadowski
Assistant Editor
