Bass, Ratcliff & Gretton, Ltd. v. State Tax Comm’n, 266 U.S. 271 (1924)

Bass, Ratcliff & Gretton, Ltd. v. State Tax Commission

No. 10

Argued April 21, 1924
Decided November 17, 1924
266 U.S. 271

ERROR TO THE SUPREME COURT

OF THE STATES OF NEW YORK

Syllabus

1. The tax imposed on foreign corporations by Art. 9-A of the Tax Law of New York, as amended, is not a direct tax on allocated income, but a tax for the privilege of doing business in the state measured by allocated income of the previous year. P. 280.

2. When the business of a foreign corporation consists in a series of transactions beginning with the manufacture of goods in its home country and ending in their sale there and in other places, the profits accruing only with the sales, a this country in which part of the business is transacted is justified in attributing to that part a just proportion of the net profits earned by the corporation from its business as a whole during the preceding year, as a basis for a tax upon its privilege of doing local business during the year to follow. Underwood Typewriter Co. v. Chamberlain, 254 U.S. 113; Wallace v. Hines, 253 U.S. 66, 69. P. 280.

3. A tax on a British corporation for the privilege of doing business in New York during the ensuing year computed under Art. 9-A of the state Tax Law on a portion of the total net income of the year last preceding, the portion being determined by the ratio between the value of such assets of the corporation of certain classes -- real and tangible personal property, bills and accounts receivable, and shares in other corporations -- as were located in New York, and the value of all its assets of those classes, held not arbitrary or unreasonable, and not a violation of due process of law or an unconstitutional burden on foreign commerce. P. 282.

4. A tax thus computed on allocated net income of the past year for the privilege of continuing local business during the year ensuing should not be deemed invalid merely because the local business of the preceding year yielded no net income, especially where the state law relieves the corporation from any personal property tax. P. 284.

5. An objection to a state tax not raised before the state taxing authorities or in the state courts cannot be assigned for error and reviewed in this Court. P. 285.

198 App.Div. 963, 232 N.Y. 42, affirmed.

Error to a judgment of the Supreme Court of New York, entered on remittitur from the Court of Appeals, confirming a tax assessment.