Cohen v. State

After notice of deficiency, assessment and a hearing, the Executive Director of the Department of Revenue determined that the appelleestaxpayers were liable for a surtax on their respective shares of 1974 income of the Subchapter S corporation in which they were shareholders. On review the district court concluded that the taxpayers’ proportionate shares of the Subchapter S corporation’s income were not dividends for surtax purposes. The trial court held regulations 138-1-6(1) and 138-1-36 invalid because these regulations attempted to broaden the definition of “dividends” beyond the scope…