State v. Chesebrough-Ponds, Inc.

This is a corporate income tax case.

In 1978 Chesebrough-Ponds, Inc., was a foreign corporation doing business in Alabama. It joined with its fifteen subsidiaries in filing a consolidated federal income tax return for that year, but filed a separate return with Alabama (Alabama does not allow for consolidated returns). Section40-18-35 (3), Code of Alabama 1975 allows as a deduction from state income tax an amount of the total federal income tax paid or accrued by a foreign corporation doing business in Alabama. The amount of federal income tax deductible by such foreign corporation is…