Davis v. State

This is a franchise tax case. Ad Agency, Inc. (the corporation) was a Texas corporation. Appellant James W. Davis was the corporation’s sole shareholder, president, and director. On September 6, 1990, the State of Texas 1 filed suit against the corporation and Davis seeking to recover franchise taxes, 2 penalties, and interest incurred in the corporation’s name. The State sought to hold Davis individually liable for the franchise debt alleging, alternatively: (1) that the corporation was Davis’ alter ego; (2) that Davis operated the corporation as a sham to perpetrate a fraud on its…