Comptroller of the Treasury v. Chesapeake Corp. of Virginia

In 1977, the Comptroller of the Treasury, Income Tax Division (Comptroller), assessed a deficiency against the Chesapeake Corporation of Virginia (Chesapeake) for three tax years in question. Chesapeake appealed to the Maryland Tax Court. The Tax Court concluded that the Comptroller was in error and vacated the assessment. After an appeal to the Baltimore City Court (Levin, J.), an order affirming the Tax Court’s decision was issued. This appeal arises from that order. For the reasons stated we shall reverse.

I

The relevant facts are not in dispute. The Chesapeake Corporation is engaged in the…