Werner MacHine Co. v. Director of Division of Taxation

The State of New Jersey imposes on each domestic corporation “an annual franchise tax ... for the privilege of having or exercising its corporate franchise” in the State. This tax, as applied to appellant, is measured by the corporation's “net worth,” which is defined as the sum of the corporation’s issued and outstanding capital stock, paid-in or capital surplus, earned surplus and undivided profits, other surplus accounts which will accrue to the shareholders (not including depreciation reserves), and debts owed to shareholders owning 10 percent or more of the corporation’s stock. Appellant…